Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v3.10.0.1
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 29, 2018
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 29, 2018
Level 1

Level 2

Level 3

 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Equity securities with readily determinable values1
$
2,041

$
188

$
3

 
$
67

$
—

 
$
2,299

 
Debt securities1
—

6,292

19


—

—

 
6,311

 
Derivatives2
1

309

—

 
—

(194
)
5 
116

7 
Total assets
$
2,042

$
6,789

$
22

 
$
67

$
(194
)
 
$
8,726

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
(8
)
$
(156
)
$
—

 
$
—

$
117

6 
$
(47
)
7 
Total liabilities
$
(8
)
$
(156
)
$
—

 
$
—

$
117

 
$
(47
)
 
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 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 $86 million in cash collateral it has netted against its net asset derivative position.
6 
The Company has the right to reclaim $1 million in cash collateral it has netted against its net liability derivative position.
7 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $116 million in the line item other assets; $2 million in the line item liabilities held for sale — discontinued operations; and $45 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
December 31, 2017
Level 1

Level 2

Level 3

 
Other4

Netting
Adjustment

5 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
 
Trading securities1
$
212

$
127

$
3

 
$
65

$
—

 
$
407

 
Available-for-sale securities1
1,899

5,739

169

3 
—

—

 
7,807

 
Derivatives2
7

250

—

 
—

(198
)
6 
59

8 
Total assets
$
2,118

$
6,116

$
172

 
$
65

$
(198
)
 
$
8,273

 
Liabilities:
 
 
 
 
 
 
 
 
 
Derivatives2
$
(3
)
$
(262
)
$
—

 
$
—

$
147

7 
$
(118
)
8 
Total liabilities
$
(3
)
$
(262
)
$
—

 
$
—

$
147

 
$
(118
)
 
1 
Refer to Note 4 for additional information related to the composition of our trading securities and available-for-sale securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 Primarily related to 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 4.
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 6.
6 The Company is obligated to return $55 million in cash collateral it has netted against its derivative position.
7 
The Company has the right to reclaim $2 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 sheet as follows:$59 million in the line item other assets; $28 million in the line item accounts payable and accrued expenses; $12 million in the line item liabilities held for sale — discontinued operations; and $78 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 29, 2018

 
June 30,
2017

 
June 29, 2018

 
June 30,
2017

  
Other long lived assets
$
(60
)
1 
$
(329
)
3 
$
(312
)
1 
$
(329
)
3 
Intangible assets
—

 
(338
)
4 
(138
)
1 
(442
)
4 
Assets held for sale5
—

 
(1,145
)
 
—

 
(1,512
)
 
Other-than-temporary impairment charge
(52
)
2 
—

 
(52
)
2 
—

 
Valuation of shares in equity method investees
—

 
25

 
—

 
25

 
Total
$
(112
)
 
$
(1,787
)
 
$
(502
)
 
$
(2,258
)
 

1 The Company recognized losses of $60 million and $450 million during the three and six months ended June 29, 2018, respectively, due to impairment charges on certain CCR intangible assets and fixed assets recorded in our Bottling Investments operating segment as a result of management's revised estimate of the proceeds that are 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. Refer to Note 11.
2 The Company recognized an other-than-temporary impairment charge of $52 million during the three and six months ended June 29, 2018 related to one of our equity method investees, 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.
3 The Company recognized losses of $310 million during the three and six months ended June 30, 2017 due to impairment charges on certain CCR fixed assets and $19 million during the three and six months ended June 30, 2017 related to CCR other assets as a result of refranchising activities in North America. These charges were determined by comparing the expected future cash flows (undiscounted and without interest charges) to the related carrying amounts.
4 
The Company recognized impairment charges of $291 million and $375 million during the three and six months ended June 30, 2017, respectively, related to CCR goodwill. These impairment charges were determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value. The Company also recognized an impairment charge of $33 million during the three and six months ended June 30, 2017, related to certain U.S. bottlers' franchise rights. This charge was determined by comparing the fair value of the asset to its current carrying value. Each of these impairment charges were primarily a result of refranchising activities in North America and management's estimates of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. Additionally, the Company recorded impairment charges of $14 million and $34 million during the three and six months ended June 30, 2017, respectively, related to Venezuelan intangible assets due to weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs.
5 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.