Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v3.10.0.1
Fair Value Measurements (Tables)
 9 Months Ended
Sep. 28, 2018
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 tables summarize those assets and liabilities measured at fair value on a recurring basis (in millions):
September 28, 2018
Level 1

Level 2

Level 3

 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Equity securities with readily determinable values1
$
1,984

$
193

$
5

 
$
66

$
—

 
$
2,248

 
Debt securities1
—

5,830

19


—

—

 
5,849

 
Derivatives2
5

385

—

 
—

(264
)
5 
126

6 
Total assets
$
1,989

$
6,408

$
24

 
$
66

$
(264
)
 
$
8,223

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
(4
)
$
(189
)
$
—

 
$
—

$
147

 
$
(46
)
6 
Total liabilities
$
(4
)
$
(189
)
$
—

 
$
—

$
147

 
$
(46
)
 
1Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy but are included to reconcile to the amounts presented in Note 4.
4 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net 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 6.
5 
The Company is obligated to return $118 million in cash collateral it has netted against its derivative position.
6 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $126 million in the line item other assets; $1 million in the line item liabilities held for sale — discontinued operations; and $45 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
December 31, 2017
Level 1

Level 2

Level 3

 
Other4

Netting
Adjustment

5 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Trading securities1
$
212

$
127

$
3

 
$
65

$
—

 
$
407

 
Available-for-sale securities1
1,899

5,739

169

3 
—

—

 
7,807

 
Derivatives2
7

250

—

 
—

(198
)
6 
59

8 
Total assets
$
2,118

$
6,116

$
172

 
$
65

$
(198
)
 
$
8,273

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
(3
)
$
(262
)
$
—

 
$
—

$
147

7 
$
(118
)
8 
Total liabilities
$
(3
)
$
(262
)
$
—

 
$
—

$
147

 
$
(118
)
 
1 
Refer to Note 4 for additional information related to the composition of our trading securities and available-for-sale securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 Primarily related to debt securities that mature in 2018.
4 
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy but are included to reconcile to the amounts presented in Note 4.
5 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net 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 6.
6 The Company is obligated to return $55 million in cash collateral it has netted against its derivative position.
7 
The Company has the right to reclaim $2 million in cash collateral it has netted against its derivative position.
8 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows:$59 million in the line item other assets; $28 million in the line item accounts payable and accrued expenses; $12 million in the line item liabilities held for sale — discontinued operations; and $78 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
Assets and liabilities measured at fair value on a Nonrecurring basis
The gains and 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
  
 
September 28, 2018

 
September 29,
2017

 
September 28, 2018

 
September 29,
2017

  
Assets held for sale — discontinued operations
$
(554
)
1 
$
—

 
$
(554
)
1 
$
—

 
Other-than-temporary impairment charge
(205
)
2 
(50
)
4 
(257
)
2 
(50
)
4 
Other long-lived assets
—

 
—

 
(312
)
3 
(329
)
5 
Intangible assets
—

 
—

 
(138
)
3 
(442
)
6 
Assets held for sale
—

 
(307
)
7 
—

 
(1,819
)
7 
Valuation of shares in equity method investees
—

 
—

 
—

 
25

8 
Total
$
(759
)
 
$
(357
)
 
$
(1,261
)
 
$
(2,615
)
 

1 The Company recorded impairment charges of $554 million related to assets held by CCBA. These charges were incurred primarily as a result of management's view of the proceeds that are expected to be received based on revised projections of future operating results and foreign currency exchange rate fluctuations. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs. We recorded these impairment charges in the line item income (loss) from discontinued operations in our condensed consolidated statements of income.
2 During the three and nine months ended September 28, 2018, we recognized an other-than-temporary impairment charge of $205 million related to PT Coca-Cola Bottling Indonesia, an equity method investee. This impairment was primarily driven by revised projections of future operating results reflecting unfavorable macroeconomic conditions and foreign currency exchange rate fluctuations. During the nine months ended September 28, 2018, we recognized an other-than-temporary impairment charge of $52 million related to one of our equity method investees in Latin America. This impairment was primarily driven by revised projections of future operating results. The fair value of each of these investments was derived using discounted cash flow analyses based on Level 3 inputs.
3 The Company recognized losses of $450 million during the nine months ended September 28, 2018 due to impairment charges on certain CCR intangible assets and fixed assets recorded in our Bottling Investments operating segment as a result of management's revised estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. These charges were determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value. Refer to Note 11.
4 
The Company recognized an other-than-temporary impairment charge of $50 million related to one of our international equity method investees, primarily driven by foreign currency exchange rate fluctuations. The fair value of this investment was derived using discounted cash flow analyses based on Level 3 inputs.
5 The Company recognized impairment charges of $310 million related to CCR property, plant and equipment and $19 million related to CCR other assets primarily as a result of refranchising activities in North America. The fair value of these assets was derived using management's estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising.
6 The Company recognized an impairment charge of $375 million related to CCR goodwill. This impairment charge was determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value. The Company also recognized an impairment charge of $33 million related to certain U.S. bottlers' franchise rights. This charge was determined by comparing the fair value of the asset to its current carrying value. Each of these impairment charges was primarily a result of refranchising activities in North America and management's estimates of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. Additionally, the Company recorded impairment charges of $34 million related to Venezuelan intangible assets due to weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs.
7 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 losses related to refranchising activities in North America and were calculated based on Level 3 inputs. Refer to Note 2.
8 The Company recognized a gain of $25 million as a result of Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock at a per share amount greater than the carrying value of the Company's per share investment. Accordingly, the Company is required to treat this type of transaction as if the Company had sold a proportionate share of its investment in Coca-Cola FEMSA. This gain was determined using Level 1 inputs.