Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

 v2.3.0.11
Fair Value Measurements (Tables)
 6 Months Ended
Jul. 01, 2011
Fair Value Measurements.  
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 as of July 1, 2011, and December 31, 2010 (in millions):

 

   July 1, 2011    

 

     Level 1     Level 2     Level 3     Netting
Adjustment
1 		  Fair Value
Measurements		  
   

Assets

                                

    Trading securities

     $     231     $      28     $      4     $     —     $     263  

    Available-for-sale securities

     1,228     6     —     —     1,234  

    Derivatives2

     38     223     3     (97 )   167  
   

        Total assets

     $  1,497     $    257     $      7     $    (97 )   $  1,664  
   

Liabilities

                                

    Derivatives2

     $         4     $    175     $    —     $  (122 )   $       57  
   

        Total liabilities

     $         4     $    175     $    —     $  (122 )   $       57  
   

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. Refer to Note 5.

  

2 Refer to Note 5 for additional information related to the composition of our derivative portfolio.

  

 

 

   December 31, 2010    

 

     Level 1     Level 2     Level 3     Netting
Adjustment
1 		  Fair Value
Measurements		  
   

Assets

                                

    Trading securities

     $  183     $    23     $      3     $      —     $  209  

    Available-for-sale securities

     480     5     —     —     485  

    Derivatives2

     19     151     4     (143 )   31  
   

        Total assets

     $  682     $  179     $      7     $   (143 )   $  725  
   

Liabilities

                                

    Derivatives2

     $      2     $  382     $    —     $   (142 )   $  242  
   

        Total liabilities

     $      2     $  382     $    —     $   (142 )   $  242  
   

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. Refer to Note 5.

  

2 Refer to Note 5 for additional information related to the composition of our derivative portfolio.

  
Assets measured at fair value on a nonrecurring basis

The gains or losses on assets measured at fair value on a nonrecurring basis for the three and six months ended July 1, 2011, and the three and six months ended July 2, 2010, are summarized in the table below (in millions):

 

   Gains (Losses)    

 

   Three Months Ended     Six Months Ended    

 

     July 1,
2011		     July 2,
2010		     July 1,
2011		     July 2,
2010		  
   

Exchange of investment in equity securities

     $  418 1   $  —     $  418 1   $    —  

Equity method investments

     (38 )2   —     (38 )2   —  

Inventories

     (3 )3   —     (7 )3   —  

Cold-drink equipment

     1 3   —     (1 )3   —  

Available-for-sale securities

     —     —     —     (26 )4
   

Total

     $  378     $  —     $  372     $   (26 )
   

1 As a result of the merger of Arca and Contal, the Company recognized a gain on the exchange of the shares we previously owned in Contal for shares in the newly formed entity Arca Contal. The gain represents the difference between the carrying value of the Contal shares we relinquished and the fair value of the Arca Contal shares we received as a result of the transaction. The gain was calculated based on Level 1 inputs. Refer to Note 10 for additional information.

  

2 The Company recognized an impairment charge of $38 million related to an investment in an entity accounted for under the equity method of accounting. Subsequent to the recognition of this impairment, the Company's remaining financial exposure related to this entity is not significant. This charge was determined using Level 3 inputs.

  

3 These assets primarily consisted of Company-owned inventory as well as cold-drink equipment that were damaged or lost as a result of the natural disasters in Japan. During the first quarter of 2011, we recorded impairment charges of $4 million and $2 million related to Company-owned inventory and cold-drink equipment, respectively. During the second quarter of 2011, the Company recorded an additional $3 million impairment charge related to the inventory and revised its estimated impairment charge from $2 million to $1 million related to the cold-drink equipment. These charges represent the Company's best estimate as of July 1, 2011, and were determined using Level 3 inputs based on the carrying value of the inventory and cold-drink equipment prior to these events.

  

4 The Company recognized other-than-temporary impairment charges on certain available-for-sale securities. The aggregate carrying value of these securities prior to recognizing the impairment charges was approximately $131 million. The Company determined the fair value of these securities based on Level 1 and Level 2 inputs. The fair value of the Level 2 security was based on a dealer quotation. Refer to Note 3 for further discussion of the factors leading to the recognition of these other-than-temporary impairment charges.