Coca Cola 2013 Annual Report Download - page 97

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The following table summarizes the pretax impact that changes in the fair values of derivatives designated as fair value hedges had
on earnings during the years ended December 31, 2013, 2012 and 2011 (in millions):
Location of Gain (Loss) Gain (Loss)
Hedging Instruments and Hedged Items Recognized in Income Recognized in Income1
2013
Interest rate contracts Interest expense $ (193)
Fixed-rate debt Interest expense 240
Net impact to interest expense $47
Foreign currency contracts Other income (loss) — net $24
Available-for-sale securities Other income (loss) — net (48)
Net impact to other income (loss) — net $ (24)
Net impact of fair value hedging instruments $23
2012
Interest rate contracts Interest expense $ 89
Fixed-rate debt Interest expense (42)
Net impact to interest expense $47
Foreign currency contracts Other income (loss) — net $ 42
Available-for-sale securities Other income (loss) — net (46)
Net impact to other income (loss) — net $(4)
Net impact of fair value hedging instruments $43
2011
Interest rate contracts Interest expense $ 343
Fixed-rate debt Interest expense (333)
Net impact to interest expense $10
1The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.
Hedges of Net Investments in Foreign Operations Strategy
The Company uses forward contracts to protect the value of our investments in a number of foreign subsidiaries. For derivative
instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in fair values of the
derivative instruments are recognized in net foreign currency translation gain (loss), a component of AOCI, to offset the changes
in the values of the net investments being hedged. Any ineffective portions of net investment hedges are reclassified from AOCI
into earnings during the period of change. The total notional values of derivatives under this hedging program were $2,024 million
and $1,718 million as of December 31, 2013 and 2012, respectively.
The following table presents the pretax impact that changes in the fair values of derivatives designated as net investment hedges
had on AOCI during the years ended December 31, 2013, 2012 and 2011 (in millions):
Gain (Loss)
Recognized in OCI
Year Ended December 31, 2013 2012 2011
Foreign currency contracts $61 $ (61) $ (3)
The Company did not reclassify any deferred gains or losses related to net investment hedges from AOCI to earnings during the
years ended December 31, 2013, 2012 and 2011. In addition, the Company did not have any ineffectiveness related to net
investment hedges during the years ended December 31, 2013, 2012 and 2011.
Economic (Non-Designated) Hedging Strategy
In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain
derivatives as economic hedges of foreign currency, interest rate and commodity exposure. Although these derivatives were not
designated and/or did not qualify for hedge accounting, they are effective economic hedges. The changes in fair value of economic
hedges are immediately recognized into earnings.
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