Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v3.19.2
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 28, 2019
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):
June 28, 2019
Level 1

Level 2

Level 3

 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Equity securities with readily determinable values1
$
1,810

$
208

$
10

 
$
60

$
—

 
$
2,088

 
Debt securities1
—

4,030

19


—

—

 
4,049

 
Derivatives2
16

667

—

 
—

(446
)
5 
237

6 
Total assets
$
1,826

$
4,905

$
29

 
$
60

$
(446
)
 
$
6,374

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
(18
)
$
(210
)
$
—

 
$
—

$
197

 
$
(31
)
6 
Total liabilities
$
(18
)
$
(210
)
$
—

 
$
—

$
197

 
$
(31
)
 
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 $258 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: $237 million in the line item other assets and $31 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
December 31, 2018
Level 1

Level 2

Level 3

 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Equity securities with readily determinable values1
$
1,681

$
186

$
6

 
$
61

$
—

 
$
1,934

 
Debt securities1
—

5,018

19

 
—

—

 
5,037

 
Derivatives2
2

313

—

 
—

(261
)
5 
54

7 
Total assets
$
1,683

$
5,517

$
25

 
$
61

$
(261
)
 
$
7,025

 
Liabilities:
 

 

 

 
 
 

 
 

 
Derivatives2
$
(14
)
$
(221
)
$
—

 
$
—

$
182

6 
$
(53
)
7 
Total liabilities
$
(14
)
$
(221
)
$
—

 
$
—

$
182

 
$
(53
)
 
1 
Refer 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 $96 million in cash collateral it has netted against its derivative position.
6 
The Company has the right to reclaim $4 million in cash collateral it has netted against its derivative position.
7 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $54 million in the line item other assets; $3 million in the line item current liabilities and $50 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
 
Six Months Ended
  
 
June 28,
2019

 
June 29,
2018

 
June 28,
2019

 
June 29,
2018

  
Other-than-temporary impairment charges
$
(49
)
1 
$
(52
)
1 
$
(392
)
1 
$
(52
)
1 
Investment in former equity method investee
—

 
—

 
(121
)
4 
—

 
CCBA asset adjustments
(160
)
2 
—

 
(160
)
2 
—

 
Other long-lived asset impairment charges
—

 
(60
)
3 
—

 
(312
)
3 
Intangible asset impairment charges
—

 
—

 
—

 
(138
)
3 
Total
$
(209
)
 
$
(112
)
 
$
(673
)
 
$
(502
)
 

1 The Company recognized an other-than-temporary impairment charge of $49 million during the three and six months ended June 28, 2019 and $52 million during the three and six months ended June 29, 2018 related to one of our equity method investees in Latin America, primarily driven by revised projections of future operating results. The fair value of this investment was derived using discounted cash flow analyses based on Level 3 inputs. During the six months ended June 28, 2019, the Company recognized an other-than-temporary impairment charge of $286 million related to our investment in CCBJHI, an equity method investee. Based on the length of time and the extent to which the market value of our investment in CCBJHI had been less than our carrying value as well as the financial condition and near-term prospects of the issuer, management determined that the decline in fair value was other than temporary in nature. This impairment charge was determined using the quoted market price (a Level 1 measurement) of CCBJHI. During the six months ended June 28, 2019, the Company also recognized an other-than-temporary impairment charge of $57 million related to one of our equity method investees in North America. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results.
2 The Company was required to measure CCBA's property, plant and equipment and definite-lived intangible assets at the lower of their current fair values or their carrying amounts before they were classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been classified as held and used during the period that CCBA was classified as held for sale. As a result, we reduced the carrying value of CCBA's property, plant and equipment and definite-lived intangible assets by $34 million and $126 million, respectively, based on Level 3 inputs. Refer to Note 2.
3 The Company recognized charges of $60 million related to CCR's property, plant and equipment during the three months ended June 29, 2018 and charges of $312 million and $138 million related to CCR's property, plant and equipment and intangible assets, respectively, during the six months ended June 29, 2018. These charges were 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.
4 The Company recognized a loss of $121 million in conjunction with our acquisition of the remaining equity ownership interest in CHI, 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. Refer to Note 2.