Coca Cola 2014 Annual Report Download - page 100

Download and view the complete annual report

Please find page 100 of the 2014 Coca Cola annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

98
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, 2014, 2013 and 2012 (in millions):
Gain (Loss)
Recognized in OCI
Year Ended December 31, 2014 2013 2012
Foreign currency contracts $ 80 $ 61 $ (61)
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, 2014, 2013 and 2012. In addition, the Company did not have any ineffectiveness related to net investment hedges
during the years ended December 31, 2014, 2013 and 2012.
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.
The Company uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange
rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. The changes in fair value of economic
hedges used to offset the monetary assets and liabilities are recognized into earnings in the line item other income (loss) — net in
our consolidated statements of income. In addition, we use foreign currency economic hedges to minimize the variability in cash
flows associated with changes in foreign currency exchange rates. The changes in fair value of economic hedges used to offset the
variability in U.S. dollar net cash flows are recognized into earnings in the line items net operating revenues and cost of goods sold in
our consolidated statements of income. The total notional values of derivatives related to our foreign currency economic hedges were
$4,334 million and $3,871 million as of December 31, 2014 and 2013, respectively.
The Company also uses certain derivatives as economic hedges to mitigate the price risk associated with the purchase of materials used
in the manufacturing process and for vehicle fuel. The changes in fair values of these economic hedges are immediately recognized
into earnings in the line items net operating revenues, cost of goods sold, and selling, general and administrative expenses in our
consolidated statements of income, as applicable. The total notional values of derivatives related to our economic hedges of this type
were $816 million and $1,441 million as of December 31, 2014 and 2013, respectively.
The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had
on earnings during the years ended December 31, 2014, 2013 and 2012 (in millions):
Derivatives Not Designated
as Hedging Instruments
Location of Gains (Losses)
Recognized in Income
Gains (Losses)
Year Ended December 31,
2014 2013 2012
Foreign currency contracts Net operating revenues $ (6) $ 5 $ (7)
Foreign currency contracts Other income (loss) — net (85) 162 24
Foreign currency contracts Cost of goods sold —2 —
Commodity contracts Net operating revenues (48) 5 4
Commodity contracts Cost of goods sold (8) (122) (110)
Commodity contracts Selling, general and administrative expenses (79) 7 9
Interest rate swaps Interest expense —(3) —
Other derivative instruments Selling, general and administrative expenses 24 55 18
Other derivative instruments Other income (loss) — net 39 — —
Total $ (163) $ 111 $ (62)