Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENTS (Tables)

v2.4.0.6
FAIR VALUE MEASUREMENTS (Tables)
12 Months Ended
Dec. 31, 2011
Fair Value Measurements Disclosure [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, 2011
 
Level 1

 
Level 2

 
Level 3

 
Netting
Adjustment1

 
Fair Value
Measurements

Assets:
 
 
 
 
 
 
 
 
 
Trading securities
$
166

 
$
41

 
$
4

 
$

 
$
211

Available-for-sale securities
1,071

 
214

 
116

2 

 
1,401

    Derivatives3
39

 
467

 

 
(117
)
 
389

Total assets
$
1,276

 
$
722

 
$
120

 
$
(117
)
 
$
2,001

Liabilities:
 
 
 
 
 
 
 
 
 
    Derivatives3
$
5

 
$
201

 
$

 
$
(121
)
 
$
85

Total liabilities
$
5

 
$
201

 
$

 
$
(121
)
 
$
85

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.
2 
Primarily related to long-term debt securities that mature in 2018.
3 
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
Adjustment1

 
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.
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
Assets measured at fair value on a nonrecurring basis for the years ended December 31, 2011 and 2010, are summarized below (in millions):
 
Gains (Losses)  
 
December 31,
2011

 
2010

 
Exchange of investment in equity securities
$
418

1 
$

 
Valuation of shares in equity method investee
122

2 

 
Equity method investments
(41
)
3 
(15
)
6 
Available-for-sale securities
(17
)
4 
(26
)
7 
Inventories
(11
)
5 

 
Cold-drink equipment
(1
)
5 

 
Investment in formerly unconsolidated subsidiary

 
4,978

8 
Retained investment in formerly consolidated subsidiary

 
12

9 
Total
$
470

 
$
4,949

 
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 and initial carrying value of our investment were calculated based on Level 1 inputs. Refer to Note 17.
2 
The Company recognized a net gain of $122 million, primarily as a result of an equity method investee issuing additional shares of its own stock at per share amounts 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 sold a proportionate share of its investment in the equity method investee. The gains the Company recognized as a result of the previous transactions were partially offset by charges associated with certain of the Company's equity method investments in Japan. The gains and charges were determined using Level 1 inputs. Refer to Note 17.
3 
The Company recognized impairment charges of $41 million related to an investment in an entity accounted for under the equity method of accounting. Subsequent to the recognition of these impairment charges, the Company's remaining financial exposure related to this entity is not significant. This charge was determined using Level 3 inputs. Refer to Note 17.
4 
The Company recognized other-than-temporary impairment charges of $17 million on certain available-for-sale securities. The Company determined the fair value of these securities based on Level 1 inputs. Refer to Note 17.
5 
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 on March 11, 2011. We recorded impairment charges of $11 million and $1 million related to Company-owned inventory and cold-drink equipment, respectively. These charges were determined using Level 3 inputs based on the carrying value of the inventory and cold-drink equipment prior to the disasters. Refer to Note 17.
6 
The Company recognized an other-than-temporary impairment charge of $15 million. The carrying value of the Company's investment prior to recognizing the impairment was $15 million. The Company determined that the fair value of the investment was zero based on Level 3 inputs. Refer to Note 17.
7 
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 $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 17.
8 
The Company recognized a gain on our previously held investment in CCE, which had been accounted for under the equity method of accounting prior to our acquisition of CCE's North American business. Accounting principles generally accepted in the United States require the acquirer to remeasure its previously held noncontrolling equity interest in the acquired entity to fair value as of the acquisition date and recognize any gains or losses in earnings. The Company remeasured our equity interest in CCE based on Level 1 inputs. Refer to Note 2 and Note 17.
9 
The Company sold 50 percent of our investment in Leão Junior, which was a wholly owned subsidiary prior to this transaction. The gain on the transaction consisted of two parts: (1) the difference between the consideration received and 50 percent of the carrying value of our investment and (2) the fair value adjustment for our remaining 50 percent ownership. The gain in the table above represents the portion of the total gain related to the remeasurement of our retained investment in Leão Junior, which was based on Level 3 inputs. Refer to Note 17 for further discussion of this transaction.
Summary of the fair value of pension plan assets for U.S. and non-U.S. pension plans
The following table summarizes the levels within the fair value hierarchy used to determine the fair value of our pension plan assets for our U.S. and non-U.S. pension plans as of December 31, 2011 and 2010 (in millions):
 
December 31, 2011
 
December 31, 2010
 
Level 1

 
Level 2

 
Level 3

 
Total

 
Level 1

 
Level 2

 
Level 3

 
Total

Cash and cash equivalents
$
152

 
$
75

 
$

 
$
227

 
$
50

 
$
76

 

 
$
126

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   U.S.-based companies
1,366

 
15

 
14

 
1,395

 
1,325

 
14

 
15

 
1,354

   International-based companies
865

 
82

 
6

 
953

 
689

 
49

 

 
738

Fixed-income securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Government bonds

 
773

 

 
773

 

 
431

 

 
431

   Corporate bonds and debt securities

 
718

 

 
718

 

 
645

 

 
645

Mutual, pooled and commingled funds
167

 
557

 
5

 
729

 
248

 
863

 
20

 
1,131

Hedge funds / limited partnerships

 
140

 
349

 
489

 

 
121

 
317

 
438

Real estate

 

 
270

 
270

 

 

 
242

 
242

Other

 
99

 
518

1 
617

 
3

 
86

 
303

1 
392

Total
$
2,550

 
$
2,459

 
$
1,162

 
$
6,171

 
$
2,315

 
$
2,285

 
$
897

 
$
5,497

1 
Includes $514 million and $299 million of purchased annuity contracts as of December 31, 2011 and 2010, respectively.
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 Level 3 assets for our U.S. and non-U.S. pension plans for the years ended December 31, 2011 and 2010 (in millions):
 
Corporate
Bonds and
Debt Securities

 
Hedge
Funds/Limited
Partnerships

 
Real Estate

 
Equity
Securities

 
Mutual,
Pooled and
Commingled
Funds

 
Other

 
Total

2010
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
$
10

 
$
80

 
$
153

 
$

 
$

 
$
45

 
$
288

Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Related to assets still held at the reporting date

 
19

 
4

 
5

 
(1
)
 
10

 
37

   Related to assets sold during the year

 
(3
)
 

 

 
1

 
(1
)
 
(3
)
Purchases, sales and settlements — net
(10
)
 
7

 
(36
)
 
10

 
(4
)
 
288

 
255

Business combinations and divestitures — net1

 
213

 
121

 

 
24

 
5

 
363

Transfers in or out of Level 3 — net

 
1

 

 

 

 
(5
)
 
(4
)
Translation

 

 

 

 

 
(39
)
 
(39
)
Balance at end of year
$

 
$
317

 
$
242

 
$
15

 
$
20

 
$
303

2 
$
897

2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
$

 
$
317

 
$
242

 
$
15

 
$
20

 
$
303

 
$
897

Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Related to assets still held at the reporting date

 
9

 
35

 
4

 
(5
)
 
61

 
104

   Related to assets sold during the year

 
(3
)
 
(5
)
 

 
6

 

 
(2
)
Purchases, sales and settlements — net

 
26

 
(2
)
 
(1
)
 
(16
)
 
146

 
153

Business combinations and divestitures — net

 

 

 

 

 

 

Transfers in or out of Level 3 — net

 
1

 

 
2

 

 
2

 
5

Translation

 
(1
)
 

 

 

 
6

 
5

Balance at end of year
$

 
$
349

 
$
270

 
$
20

 
$
5

 
$
518

2 
$
1,162

1 
Primarily related to our acquisition of CCE's North American business and the sale of our Norwegian and Swedish bottling operations to New CCE. Refer to Note 2.
2 
Includes $514 million and $299 million of purchased annuity contracts as of December 31, 2011 and 2010, respectively.
Summary of the fair value of postretirement benefit plan assets
The following table summarizes the levels within the fair value hierarchy used to determine the fair value of our other postretirement benefit plan assets as of December 31, 2011 and 2010 (in millions):
 
December 31, 2011
 
December 31, 2010
 
Level 1

 
Level 2

 
Level 3 1

 
Total

 
Level 1

 
Level 2

 
Level 3 1

 
Total

Cash and cash equivalents
$

 
$
86

 
$

 
$
86

 
$

 
$
84

 
$

 
$
84

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.-based companies
70

 

 

 
70

 
75

 

 

 
75

International-based companies
13

 

 

 
13

 
14

 

 

 
14

Fixed-income securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government bonds

 
2

 

 
2

 

 
1

 

 
1

Corporate bonds and debt securities

 
6

 

 
6

 

 
6

 

 
6

Mutual, pooled and commingled funds

 
3

 

 
3

 

 
3

 

 
3

Hedge funds / limited partnerships

 

 
2

 
2

 

 

 
1

 
1

Real estate

 

 
2

 
2

 

 

 
2

 
2

Other

 
1

 

 
1

 

 
1

 

 
1

Total
$
83

 
$
98

 
$
4

 
$
185

 
$
89

 
$
95

 
$
3

 
$
187

1 
Level 3 assets are not a significant portion of other postretirement benefit plan assets.