The Coca-Cola Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Hedging Transactions and Derivative Financial Instruments (Tables)

Hedging Transactions and Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 29, 2017

Hedging Transactions and Derivative Financial Instruments

Derivative instruments, fair value, designated as hedging instruments

The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in millions):



		Fair Value^1,2
Derivatives Designated as Hedging Instruments	Balance Sheet Location¹	September 29, 2017		December 31, 2016
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	210	$	400
Foreign currency contracts	Other assets	95		60
Interest rate contracts	Other assets	71		105
Total assets		$	376	$	565
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	120	$	40
Foreign currency contracts	Other liabilities	8		54
Commodity contracts	Accounts payable and accrued expenses	—		1
Interest rate contracts	Accounts payable and accrued expenses	33		36
Interest rate contracts	Other liabilities	34		47
Total liabilities		$	195	$	178

¹All of the Company's derivative instruments are carried at fair value in our condensed consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 14 for the net presentation of the Company's derivative instruments.

²Refer to Note 14 for additional information related to the estimated fair value.

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):



		Fair Value^1,2
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location¹	September 29, 2017		December 31, 2016
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	39	$	284
Foreign currency contracts	Other assets	25		—
Commodity contracts	Prepaid expenses and other assets	15		27
Commodity contracts	Other assets	1		1
Other derivative instruments	Prepaid expenses and other assets	8		4
Other derivative instruments	Other assets	1		1
Total assets		$	89	$	317
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	59	$	60
Foreign currency contracts	Other liabilities	41		16
Commodity contracts	Accounts payable and accrued expenses	16		16
Commodity contracts	Other liabilities	1		1
Interest rate contracts	Accounts payable and accrued expenses	—		8
Interest rate contracts	Other liabilities	—		1
Other derivative instruments	Accounts payable and accrued expenses	1		2
Other derivative instruments	Other liabilities	—		5
Total liabilities		$	118	$	109

²Refer to Note 14 for additional information related to the estimated fair value.

Derivative instruments, designated as hedging instruments, gain (loss) in statement of financial performance

The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the three months ended September 29, 2017 (in millions):



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Foreign currency contracts	$	(35	)	Net operating revenues	$	116		$	—	²
Foreign currency contracts	(11		)	Cost of goods sold	(4		)	—		²
Foreign currency contracts	—			Interest expense	(2		)	—
Foreign currency contracts	100			Other income (loss) — net	100			7
Interest rate contracts	(1		)	Interest expense	(9		)	—
Commodity contracts	—			Cost of goods sold	(1		)	—
Total	$	53			$	200		$	7

¹The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated statements of income.

²Includes a de minimis amount of ineffectiveness in the hedging relationship.

The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the nine months ended September 29, 2017 (in millions):



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Foreign currency contracts	$	(216	)	Net operating revenues	$	339		$	(1	)
Foreign currency contracts	(27		)	Cost of goods sold	1			—			²
Foreign currency contracts	—			Interest expense	(7		)	—
Foreign currency contracts	113			Other income (loss) — net	152			7
Interest rate contracts	(25		)	Interest expense	(26		)	2
Commodity contracts	(1		)	Cost of goods sold	—			—
Total	$	(156	)		$	459		$	8

²Includes a de minimis amount of ineffectiveness in the hedging relationship.



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Foreign currency contracts	$	(48	)	Net operating revenues	$	141		$	(2	)
Foreign currency contracts	9			Cost of goods sold	8			—
Foreign currency contracts	—			Interest expense	(2		)	—
Foreign currency contracts	36			Other income (loss) — net	40			—
Interest rate contracts	26			Interest expense	(2		)	3
Commodity contracts	(1		)	Cost of goods sold	—			—
Total	$	22			$	185		$	1



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Foreign currency contracts	$	(348	)	Net operating revenues	$	419		$	(3	)
Foreign currency contracts	(34		)	Cost of goods sold	41			(1		)
Foreign currency contracts	—			Interest expense	(6		)	—
Foreign currency contracts	25			Other income (loss) — net	38			—
Interest rate contracts	(226		)	Interest expense	(6		)	3
Commodity contracts	—			Cost of goods sold	—			—
Total	$	(583	)		$	486		$	(1	)

Derivative instruments, fair value hedges, gain (loss) recognized in income

The following table summarizes the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings (in millions):



Hedging Instruments and Hedged Items	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income¹
		Three Months Ended
		September 29, 2017			September 30, 2016
Interest rate contracts	Interest expense	$	19		$	—
Fixed-rate debt	Interest expense	(15		)	(1		)
Net impact to interest expense		$	4		$	(1	)
Foreign currency contracts	Other income (loss) — net	$	(23	)	$	(67	)
Available-for-sale securities	Other income (loss) — net	26			66
Net impact to other income (loss) — net		$	3		$	(1	)
Net impact of fair value hedging instruments		$	7		$	(2	)

¹The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.

The following table summarizes the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings (in millions):



Hedging Instruments and Hedged Items	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income¹
		Nine Months Ended
		September 29, 2017			September 30, 2016
Interest rate contracts	Interest expense	$	(46	)	$	398
Fixed-rate debt	Interest expense	42			(364		)
Net impact to interest expense		$	(4	)	$	34
Foreign currency contracts	Other income (loss) — net	$	(66	)	$	(37	)
Available-for-sale securities	Other income (loss) — net	72			34
Net impact to other income (loss) — net		$	6		$	(3	)
Net impact of fair value hedging instruments		$	2		$	31

¹The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.

Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):



	Notional Amount				Gain (Loss) Recognized in OCI
	as of				Three Months Ended						Nine Months Ended
	September 29, 2017		December 31, 2016		September 29, 2017			September 30, 2016			September 29, 2017			September 30, 2016
Foreign currency contracts	$	170	$	100	$	(4	)	$	(9	)	$	(19	)	$	(235	)
Foreign currency denominated debt	13,118		11,113		(549		)	(67		)	(1,475		)	(323		)
Total	$	13,288	$	11,213	$	(553	)	$	(76	)	$	(1,494	)	$	(558	)

Schedule of Derivative Instruments Not Designated as Hedging Instruments Gain (Loss) in Statement of Financial Performance [Table Text Block]

The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):



		Three Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income	September 29, 2017			September 30, 2016
Foreign currency contracts	Net operating revenues	$	(5	)	$	(6	)
Foreign currency contracts	Other income (loss) — net	47			—
Interest rate contracts	Interest expense	—			2
Commodity contracts	Net operating revenues	12			—
Commodity contracts	Cost of goods sold	(15		)	(9		)
Commodity contracts	Selling, general and administrative expenses	3			(1		)
Other derivative instruments	Selling, general and administrative expenses	8			3
Other derivative instruments	Other income (loss) — net	1			—
Total		$	51		$	(11	)

The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):



		Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income	September 29, 2017			September 30, 2016
Foreign currency contracts	Net operating revenues	$	(23	)	$	(34	)
Foreign currency contracts	Cost of goods sold	—			4
Foreign currency contracts	Other income (loss) — net	149			(116		)
Interest rate contracts	Interest expense	—			2
Commodity contracts	Net operating revenues	7			3
Commodity contracts	Cost of goods sold	13			68
Commodity contracts	Selling, general and administrative expenses	—			3
Other derivative instruments	Selling, general and administrative expenses	33			11
Other derivative instruments	Other income (loss) — net	2			(14		)
Total		$	181		$	(73	)