The Coca-Cola Company Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Hedging Transactions and Derivative Financial Instruments Disclosures [Abstract]

Derivative instruments, fair value, designated as hedging instruments

The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in millions):



		Fair Value^1,2
Derivatives Designated as Hedging Instruments	Balance Sheet Location¹	December 31, 2019		December 31, 2018
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	24	$	43
Foreign currency contracts	Other assets	91		114
Interest rate contracts	Prepaid expenses and other assets	10		—
Interest rate contracts	Other assets	427		88
Total assets		$	552	$	245
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	40	$	19
Foreign currency contracts	Other liabilities	48		15
Commodity contracts	Accounts payable and accrued expenses	—		1
Interest rate contracts	Other liabilities	21		40
Total liabilities		$	109	$	75

All of the Company's derivative instruments are carried at fair value in our consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 18 for the net presentation of the Company's derivative instruments.

Refer to Note 18 for additional information related to the estimated fair value.

Derivative instruments, fair value, not designated as hedging instruments

The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):



		Fair Value^1,2
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location¹	December 31, 2019		December 31, 2018
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	13	$	61
Commodity contracts	Prepaid expenses and other assets	8		2
Commodity contracts	Other assets	2		—
Other derivative instruments	Prepaid expenses and other assets	12		7
Other derivative instruments	Other assets	1		—
Total assets		$	36	$	70
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	39	$	101
Commodity contracts	Accounts payable and accrued expenses	13		38
Commodity contracts	Other liabilities	1		8
Other derivative instruments	Accounts payable and accrued expenses	—		13
Total liabilities		$	53	$	160

Refer to Note 18 for additional information related to the estimated fair value.

Derivative instruments, pretax impact that changes in the fair value of the derivatives designated as hedges had on AOCI and earnings

The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings (in millions):



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)			²
2019
Foreign currency contracts	$	(58	)	Net operating revenues	$	(3	)	$	—
Foreign currency contracts	1			Cost of goods sold	11			—
Foreign currency contracts	—			Interest expense	(9		)	—
Foreign currency contracts	(97		)	Other income (loss) — net	(119		)	—
Interest rate contracts	(47		)	Interest expense	(42		)	—
Commodity contracts	1			Cost of goods sold	—			—
Total	$	(200	)		$	(162	)	$	—
2018
Foreign currency contracts	$	9		Net operating revenues	$	136		$	1
Foreign currency contracts	15			Cost of goods sold	8			(3		)
Foreign currency contracts	—			Interest expense	(9		)	—
Foreign currency contracts	23			Other income (loss) — net	(5		)	(4		)
Interest rate contracts	22			Interest expense	(40		)	(8		)
Commodity contracts	(1		)	Cost of goods sold	—			(5		)
Total	$	68			$	90		$	(19	)
2017
Foreign currency contracts	$	(226	)	Net operating revenues	$	443		$	1
Foreign currency contracts	(26		)	Cost of goods sold	(2		)	—			³
Foreign currency contracts	—			Interest expense	(9		)	—
Foreign currency contracts	92			Other income (loss) — net	107			3
Interest rate contracts	(22		)	Interest expense	(37		)	2
Commodity contracts	(6		)	Cost of goods sold	(1		)	—
Total	$	(188	)		$	501		$	6

¹The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our consolidated statement of income.

²Effective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. No components of the Company's hedging instruments were excluded from the assessment of hedge effectiveness.

³Includes a de minimis amount of ineffectiveness in the hedging relationship.

Derivative instruments, fair value hedges, gain (loss) recognized in income

The following table summarizes the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings (in millions):



Hedging Instruments and Hedged Items	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
2019
Interest rate contracts	Interest expense	$	368
Fixed-rate debt	Interest expense	(369		)
Net impact to interest expense		$	(1	)
Net impact of fair value hedging instruments		$	(1	)
2018
Interest rate contracts	Interest expense	$	34
Fixed-rate debt	Interest expense	(38		)
Net impact to interest expense		$	(4	)
Foreign currency contracts	Other income (loss) — net	$	(6	)
Available-for-sale securities	Other income (loss) — net	6
Net impact to other income (loss) — net		$	—
Net impact of fair value hedging instruments		$	(4	)
2017
Interest rate contracts	Interest expense	$	(69	)
Fixed-rate debt	Interest expense	63
Net impact to interest expense		$	(6	)
Foreign currency contracts	Other income (loss) — net	$	(37	)
Available-for-sale securities	Other income (loss) — net	44
Net impact to other income (loss) — net		$	7
Net impact of fair value hedging instruments		$	1

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table summarizes the amounts recorded in the consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):



	Carrying Value of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Value of the Hedged Item¹
Balance Sheet Location of Hedged Item	December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
Current maturities of long-term debt	$	1,004	$	—	$	5	$	—
Long-term debt	12,087		8,043		448		62

¹Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rates.

Derivative instruments,fair value of net investment hedges, gain (loss) recognized in AOCI

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):



	Notional Amount				Gain (Loss) Recognized in OCI
	as of December 31,				Year Ended December 31,
	2019		2018		2019		2018			2017
Foreign currency contracts	$	—	$	—	$	51	$	(14	)	$	(7	)
Foreign currency denominated debt	12,334		12,494		144		653			(1,505		)
Total	$	12,334	$	12,494	$	195	$	639		$	(1,512	)

Derivative instruments, not designated as hedging instruments, gain (loss) in earnings

The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):



Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Year Ended December 31,
		2019			2018			2017
Foreign currency contracts	Net operating revenues	$	(4	)	$	22		$	(30	)
Foreign currency contracts	Cost of goods sold	1			9			(1		)
Foreign currency contracts	Other income (loss) — net	(66		)	(264		)	73
Commodity contracts	Net operating revenues	—			—			16
Commodity contracts	Cost of goods sold	(23		)	(25		)	15
Commodity contracts	Selling, general and administrative expenses	—			—			1
Interest rate contracts	Interest expense	—			(1		)	—
Other derivative instruments	Selling, general and administrative expenses	47			(18		)	46
Other derivative instruments	Other income (loss) — net	48			(22		)	1
Total		$	3		$	(299	)	$	121