The Coca-Cola Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Investments

Investments

9 Months Ended

Sep. 30, 2011

Investments in debt and marketable equity securities, other than investments accounted for under the equity method, are classified as trading, available-for-sale or held-to-maturity. Our marketable equity investments are classified as either trading or available-for-sale with their cost basis determined by the specific identification method. Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in net income. Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in our condensed consolidated balance sheets as a component of accumulated other comprehensive income (loss) ("AOCI").

Our investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale.

Trading Securities

As of September 30, 2011, and December 31, 2010, our trading securities had a fair value of $198 million and $209 million, respectively. The Company had net unrealized losses on trading securities of $13 million and $3 million as of September 30, 2011, and December 31, 2010, respectively. The Company's trading securities were included in the following captions in our condensed consolidated balance sheets (in millions):



	September 30, 2011		December 31, 2010
Marketable securities	$	125	$	132
Other assets	73		77
Total trading securities	$	198	$	209

Available-for-Sale and Held-to-Maturity Securities

As of September 30, 2011, available-for-sale and held-to-maturity securities consisted of the following (in millions):



			Gross Unrealized					Estimated
	Cost		Gains		Losses			Fair Value
Available-for-sale securities:¹
Equity securities	$	940	$	270	$	(12	)	$	1,198
Other securities	85		1		(1		)	85
	$	1,025	$	271	$	(13	)	$	1,283
Held-to-maturity securities:
Bank and corporate debt	$	325	$	—	$	—		$	325

¹Refer to Note 14 for additional information related to the estimated fair value.

As of December 31, 2010, available-for-sale and held-to-maturity securities consisted of the following (in millions):



			Gross Unrealized					Estimated
	Cost		Gains		Losses			Fair Value
Available-for-sale securities:¹
Equity securities	$	209	$	267	$	(5	)	$	471
Other securities	14		—		—			14
	$	223	$	267	$	(5	)	$	485
Held-to-maturity securities:
Bank and corporate debt	$	111	$	—	$	—		$	111

¹Refer to Note 14 for additional information related to the estimated fair value.

At the end of the first quarter of 2010, the Company had several investments classified as available-for-sale securities in which our cost basis exceeded the fair value of the investment. Management assessed each of these investments on an individual basis to determine if the decline in fair value was other than temporary. Based on these assessments, management determined that the decline in fair value of each investment was other than temporary. As a result, the Company recognized other-than-temporary impairment charges of $26 million during the three months ended April 2, 2010. These impairment charges were recorded in other income (loss) — net in our condensed consolidated statements of income. Refer to Note 10 and Note 14.

The sale of available-for-sale securities did not result in significant gross gains, gross losses or proceeds during the three and nine months ended September 30, 2011, and October 1, 2010.

The Company's available-for-sale and held-to-maturity securities were included in the following captions in our condensed consolidated balance sheets (in millions):



	September 30, 2011				December 31, 2010
	Available- for-Sale Securities		Held-to- Maturity Securities		Available- for-Sale Securities		Held-to- Maturity Securities
Cash and cash equivalents	$	—	$	324	$	—	$	110
Marketable securities	5		1		5		1
Other investments, principally bottling companies	1,103		—		471		—
Other assets	175		—		9		—
	$	1,283	$	325	$	485	$	111

The contractual maturities of these investments as of September 30, 2011, were as follows (in millions):



	Available-for-Sale Securities				Held-to-Maturity Securities
	Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	—	$	—	$	325	$	325
After 1 year through 5 years	2		2		—		—
After 5 years through 10 years	72		73		—		—
After 10 years	11		10		—		—
Equity securities	940		1,198		—		—
	$	1,025	$	1,283	$	325	$	325

Cost Method Investments

Cost method investments are originally recorded at cost, and we record dividend income when applicable dividends are declared. Cost method investments are reported as other investments in our condensed consolidated balance sheets, and dividend income from cost method investments is reported in other income (loss) — net in our condensed consolidated statements of income. We review all of our cost method investments quarterly to determine if impairment indicators are present; however, we are not required to determine the fair value of these investments unless impairment indicators exist. When impairment indicators exist, we generally use discounted cash flow analyses to determine the fair value. We estimate that the fair values of our cost method investments approximated or exceeded their carrying values as of September 30, 2011, and December 31, 2010. Our cost method investments had a carrying value of $161 million and $160 million as of September 30, 2011, and December 31, 2010, respectively.