Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENTS (Tables)

v3.25.0.1
FAIR VALUE MEASUREMENTS (Tables)
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
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):
December 31, 2024
Level 1 Level 2 Level 3
Other3
Netting
Adjustment
4
 Fair Value
Measurements
Assets:          
Equity securities with readily determinable values1
$ 1,790  $ 137  $ 13  $ 94  $ —  $ 2,034 
Debt securities1
—  1,676  —  —  —  1,676 
Derivatives2
2  587  —  —  (370)
6
 219 
8
Total assets $ 1,792  $ 2,400  $ 13  $ 94  $ (370) $ 3,929 
Liabilities:          
Contingent consideration liability $ —  $ —  $ 6,126 
5
 $ —  $ —  $ 6,126 
Derivatives2
—  1,119  —  —  (1,097)
7
 22 
8
Total liabilities $ —  $ 1,119  $ 6,126  $ —  $ (1,097) $ 6,148 
1Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2Refer to Note 5 for additional information related to the composition of our derivatives portfolio.
3Certain 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.
4Amounts 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 were 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.
5Represents the fair value of the remaining milestone payment related to our acquisition of fairlife in 2020, which is contingent on fairlife achieving certain financial targets through 2024 and is payable in 2025. This milestone payment is based on agreed-upon formulas related to
fairlife’s operating results, the resulting value of which is not subject to a ceiling. The fair value was determined using discounted cash flow analyses. We are required to remeasure this liability to fair value quarterly, with any changes in the fair value recorded in income until the final milestone payment is made.
6The Company is obligated to return $12 million in cash collateral it has netted against its derivative position.
7The Company has the right to reclaim $735 million in cash collateral it has netted against its derivative position.
8The Company’s derivative financial instruments were recorded at fair value in our consolidated balance sheet as follows: $102 million in the line item prepaid expenses and other current assets, $117 million in the line item other noncurrent assets, and $22 million in the line item other noncurrent liabilities. Refer to Note 5 for additional information related to the composition of our derivatives portfolio.
December 31, 2023
Level 1 Level 2 Level 3
Other3
Netting
Adjustment
4
 Fair Value
Measurements
Assets:          
Equity securities with readily determinable values1
$ 1,727  $ 188  $ 6  $ 85  $ —  $ 2,006 
Debt securities1
—  1,172  3  —  —  1,175 
Derivatives2
—  275  —  —  (222)
6
 53 
8
Total assets $ 1,727  $ 1,635  $ 9  $ 85  $ (222) $ 3,234 
Liabilities:          
Contingent consideration liability $ —  $ —  $ 3,017 
5
 $ —  $ —  $ 3,017 
Derivatives2
3  1,445  —  —  (1,256)
7
 192 
8
Total liabilities $ 3  $ 1,445  $ 3,017  $ —  $ (1,256) $ 3,209 
1Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2Refer to Note 5 for additional information related to the composition of our derivatives portfolio.
3Certain 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.
4Amounts 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 were 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.
5Represents the fair value of the remaining milestone payment related to our acquisition of fairlife, which is contingent on fairlife achieving certain financial targets through 2024 and, if achieved, is payable in 2025. This milestone payment is based on agreed-upon formulas related to fairlife’s operating results, the resulting value of which is not subject to a ceiling. The fair value was determined using a Monte Carlo valuation model. We are required to remeasure this liability to fair value quarterly, with any changes in the fair value recorded in income until the final milestone payment is made. The Company made a milestone payment of $275 million during 2023.
6The Company is obligated to return $4 million in cash collateral it had netted against its derivative position.
7The Company had the right to reclaim $1,039 million in cash collateral it had netted against its derivative position.
8The Company’s derivative financial instruments were recorded at fair value in our consolidated balance sheet as follows: $53 million in the line item other noncurrent assets and $192 million in the line item other noncurrent liabilities. Refer to Note 5 for additional information related to the composition of our derivatives portfolio.
Gains and losses on assets 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 following table (in millions):
Gains (Losses)  
Year Ended December 31, 2024   2023  
Impairment of property, plant and equipment $ (63)
1
 $ (46)
4
Other-than-temporary impairment charges (34)
2
 (39)
5
Impairment of intangible assets (886)
3
 — 
Total $ (983) $ (85)
1The Company recorded an asset impairment charge of $63 million during the year ended December 31, 2024 related to certain prototypes. This impairment charge, which was calculated based on Level 3 inputs, was driven by management’s strategic decision to cease use of the assets. This charge was recorded in the line item selling, general and administrative expenses in our consolidated statement of income.
2The Company recorded an other-than-temporary impairment charge of $34 million during the year ended December 31, 2024 related to an equity method investee in Latin America. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results. This charge was recorded in the line item other income (loss) — net in our consolidated statement of income.
3The Company recorded an asset impairment charge of $760 million during the year ended December 31, 2024 related to our BodyArmor trademark in North America, which was primarily driven by revised projections of future operating results and higher discount rates resulting from changes in macroeconomic conditions since the acquisition date. The fair value of this trademark was derived using discounted cash flow analyses based on Level 3 inputs. This charge was recorded in the line item other operating charges in our consolidated statement of income. The remaining carrying value of the trademark is $3,400 million. Additionally, the Company recorded an asset impairment charge of $126 million related to a trademark in Latin America, which was primarily driven by revised projections of future operating results and changes in macroeconomic conditions. The fair value of this trademark was derived using discounted cash flow analyses based on Level 3 inputs. This charge was recorded in the line item other operating charges in our consolidated statement of income. The remaining carrying value of the trademark is $86 million.
4The Company recorded an asset impairment charge of $25 million during the year ended December 31, 2023 related to the discontinuation of certain manufacturing operations in Asia Pacific. Additionally, the Company recorded an asset impairment charge of $21 million during the year ended December 31, 2023 related to the restructuring of our manufacturing operations in the United States. These charges, which were calculated based on Level 3 inputs, were primarily driven by management’s best estimate of the potential proceeds from the disposal of the related assets.
5The Company recorded an other-than-temporary impairment charge of $39 million during the year ended December 31, 2023 related to an equity method investee in Latin America. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results.
Summary of the levels within the fair value hierarchy of pension plan assets
The following table summarizes the levels within the fair value hierarchy for our pension plan assets (in millions):
December 31, 2024 December 31, 2023
Level 1 Level 2 Level 3 Other
1
 Total Level 1 Level 2 Level 3 Other
1
 Total
Cash and cash equivalents $ 203  $ 376  $ —  $ —  $ 579  $ 163  $ 212  $ —  $ —  $ 375 
Equity securities:    
U.S.-based companies 1,022  1  28  —  1,051  1,148  —  30  —  1,178 
International-based companies 691  10  2  —  703  904  15  2  —  921 
Fixed-income securities:
Government bonds 79  930  —  —  1,009  107  1,279  —  —  1,386 
Corporate bonds and debt
   securities		 —  529  17  —  546  —  552  27  —  579 
Mutual, pooled and commingled
   funds		 24  277  —  386 
4
 687  12  257  —  509 
8
 778 
Hedge funds/limited
   partnerships		 —  —  —  1,023 
5
 1,023  —  —  —  1,057 
5
 1,057 
Real estate —  —  —  341 
6
 341  —  —  —  376 
6
 376 
Derivative financial instruments —  (63)
2
 —  —  (63) —  33 
2
 —  —  33 
Other —  —  311 
3
 248 
7
 559  —  —  323 
3
 254 
7
 577 
Total $ 2,019  $ 2,060  $ 358  $ 1,998  $ 6,435  $ 2,334  $ 2,348  $ 382  $ 2,196  $ 7,260 
1Certain 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 14.
2This class of assets includes investments in interest rate contracts, credit contracts and foreign exchange contracts.
3Includes purchased annuity insurance contracts.
4This class of assets primarily includes a mortgage-related fixed income securities fund, alternative investment funds and collective trust funds for qualified plans. There are no liquidity restrictions on these investments.
5This class of assets includes hedge funds that can be subject to redemption restrictions, ranging from monthly to semiannually, with a redemption notice period of up to one year and/or initial lock-up periods of up to three years, and private equity funds that are primarily closed-end funds in which the Company’s investments are generally not eligible for redemption. Distributions from these private equity funds will be received as the underlying assets are liquidated or distributed.
6This class of assets includes funds invested in real estate, including a privately held real estate investment trust, a real estate commingled pension trust fund, infrastructure limited partnerships and commingled investment funds. These funds seek current income and capital appreciation and can be subject to quarterly redemption restrictions, with a redemption notice period of up to 90 days.
7Primarily includes segregated portfolios of private investment funds that are invested in a portfolio of insurance-linked securities. These assets can be subject to a semiannual redemption, with a redemption notice period of 90 days, subject to certain gate restrictions.
8This class of assets includes actively managed emerging markets equity funds and a collective trust fund for qualified plans, invested primarily in equity securities of companies in developing and emerging markets. There are no liquidity restrictions on these investments.
Reconciliation of the beginning and ending balance of Level 3 assets for U.S. and non-U.S. pension plans
The following table provides a reconciliation of the beginning and ending balance of our Level 3 pension plan assets (in millions):
Equity
Securities		 Fixed-Income Securities
Other1
Total
2023        
Balance at beginning of year $ 27  $ 30  $ 300  $ 357 
Actual return on plan assets 1  (2) 8  7 
Purchases, sales and settlements — net —  (1) 7  6 
Transfers into (out of) Level 3 — net 4  —  —  4 
Net foreign currency translation adjustments —  —  8  8 
Balance at end of year $ 32  $ 27  $ 323  $ 382 
2024      
Balance at beginning of year $ 32  $ 27  $ 323  $ 382 
Actual return on plan assets 1  2  8  11 
Purchases, sales and settlements — net (3) (12) (2) (17)
Net foreign currency translation adjustments —  —  (18) (18)
Balance at end of year $ 30  $ 17  $ 311  $ 358 
1Includes purchased annuity insurance contracts.