Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v3.5.0.2
Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2016
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 table summarizes those assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 (in millions):
 
Level 1

Level 2

Level 3

 
Other4

Netting
Adjustment

5 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Trading securities1
$
199

$
113

$
3

 
$
64

$
—

 
$
379

 
Available-for-sale securities1
1,715

4,741

149

3 
—

—

 
6,605

 
Derivatives2
1

973

—

 
—

(573
)
6 
401

7 
Total assets
$
1,915

$
5,827

$
152

 
$
64

$
(573
)
 
$
7,385

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
10

$
477

$
—

 
$
—

$
(368
)
 
$
119

7 
Total liabilities
$
10

$
477

$
—

 
$
—

$
(368
)
 
$
119

 
1 
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
2 Refer to Note 5 for additional information related to the composition of our derivative portfolio.
3 Primarily related to long-term debt securities that mature in 2018.
4 
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 3.
5 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. 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 5.
6 The Company is obligated to return $223 million in cash collateral it has netted against its net asset derivative position.
7 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets as follows: $401 million in the line item other assets; $9 million in the line item accounts payable and accrued expenses; and $110 million in the line item other liabilities. Refer to Note 5 for additional information related to the composition of our derivative portfolio.
The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 (in millions):
 
Level 1

Level 2

Level 3

 
Other4

Netting
Adjustment

5 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Trading securities1
$
183

$
101

$
2

 
$
36

$
—

 
$
322

 
Available-for-sale securities1
3,913

4,574

119

3 
—

—

 
8,606

 
Derivatives2
2

1,268

—

 
—

(638
)
6 
632

8 
Total assets
$
4,098

$
5,943

$
121

 
$
36

$
(638
)
 
$
9,560

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
24

$
635

$
—

 
$
—

$
(488
)
7 
$
171

8 
Total liabilities
$
24

$
635

$
—

 
$
—

$
(488
)
 
$
171

 
1 
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
2 Refer to Note 5 for additional information related to the composition of our derivative portfolio.
3 Primarily related to long-term debt securities that mature in 2018.
4 
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 3.
5 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. 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 5.
6 The Company is obligated to return $184 million in cash collateral it has netted against its derivative position.
7 
The Company has the right to reclaim $17 million in cash collateral it has netted against its derivative position.
8 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets as follows: $79 million in the line item prepaid expenses and other assets; $553 million in the line item other assets; and $171 million in the line item other liabilities. Refer to Note 5 for additional information related to the composition of our derivative portfolio.
Assets and liabilities measured at fair value on a Nonrecurring basis
The gains or losses on assets measured at fair value on a nonrecurring basis are summarized in the table below (in millions):
 
Gains (Losses)  
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30, 2016

 
October 2, 2015

 
September 30, 2016

 
October 2, 2015

 
Assets held for sale1
$
(1,044
)
 
$
(799
)
 
$
(1,490
)
 
$
(822
)
 
Intangible assets
—

 
(41
)
2 
—

 
(473
)
3 
Investment in formerly unconsolidated subsidiary
—

 
—

 
—

 
(19
)
4 
Valuation of shares in equity method investee
—

 
—

 
—

 
(6
)
5 
Total
$
(1,044
)
 
$
(840
)
 
$
(1,490
)
 
$
(1,320
)
 
1 
The Company is required to record assets and liabilities that are held for sale at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sale price. These losses related to refranchising activities in North America, which were calculated based on Level 3 inputs. Refer to Note 2.
2 
The Company recognized a loss of $41 million, which included a $38 million impairment charge on one of the trademarks in the glacéau portfolio and a $3 million impairment charge on a Venezuelan trademark. These losses were derived using a discounted cash flow analysis based on Level 3 inputs. Refer to Note 1, Note 2 and Note 10.
3 
The Company recognized a loss of $473 million, which included $418 million of impairment charges primarily due to the discontinuation of the energy products in the glacéau portfolio as a result of the Monster Transaction and a $55 million impairment charge on a Venezuelan trademark. The charges were primarily determined by comparing the fair value of the assets to the current carrying value. The fair value of the assets was derived using discounted cash flow analyses based on Level 3 inputs. Refer to Note 1, Note 2 and Note 10.
4 
The Company recognized a loss of $19 million on our previously held investment in a South African bottler, which had been accounted for under the equity method of accounting prior to our acquisition of the bottler in February 2015. U.S. GAAP requires 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 the South African bottler based on Level 3 inputs. Refer to Note 2 and Note 10.
5 
The Company recognized a loss of $6 million as a result of the owners of the majority interest in a Brazilian bottling entity exercising their option to acquire from us a 10 percent interest in the entity's outstanding shares. The exercise price was lower than our carrying value. This loss was determined using Level 3 inputs. Refer to Note 10.