Coca Cola 2015 Annual Report Download - page 102

The Company maintains a foreign currency cash flow hedging program to reduce the risk that our eventual U.S. dollar net cash inflows from sales outside the
United States and U.S. dollar net cash outflows from procurement activities will be adversely affected by changes in foreign currency exchange rates. We
enter into forward contracts and purchase foreign currency options (principally euros and Japanese yen) and collars to hedge certain portions of forecasted
cash flows denominated in foreign currencies. When the U.S. dollar strengthens against the foreign currencies, the decline in the present value of future
foreign currency cash flows is partially offset by gains in the fair value of the derivative instruments. Conversely, when the U.S. dollar weakens, the increase
in the present value of future foreign currency cash flows is partially offset by losses in the fair value of the derivative instruments. The total notional values
of derivatives that have been designated and qualify for the Company's foreign currency cash flow hedging program were $10,383 million and $13,224
million as of December 31, 2015 and 2014, respectively.
The Company uses cross-currency swaps to hedge the changes in cash flows of certain of its foreign currency denominated debt due to changes in foreign
currency exchange rates. For this hedging program, the Company records the change in carrying value of the foreign currency denominated debt due to
changes in exchange rates into earnings each period. The changes in fair value of the cross-currency swap derivatives are recorded in AOCI with an
immediate reclassification into earnings for the change in fair value attributable to fluctuations in foreign currency exchange rates. These swaps had a
notional amount of $2,590 million as of December 31, 2014. During the year ended December 31, 2015, the Company discontinued the cash flow hedge
relationships related to these swaps. Upon discontinuance, the Company recognized a loss of $92 million in other comprehensive income, which will be
reclassified from AOCI into interest expense over the remaining life of the debt, a weighted-average period of approximately 10 years. The Company did not
discontinue any cash flow hedging relationships during the years ended December 31, 2014 and 2013. During the year ended December 31, 2015, the
Company entered into new cross-currency swaps, which had a notional value of $566 million as of December 31, 2015.
The Company has entered into commodity futures contracts and other derivative instruments on various commodities to mitigate the price risk associated
with forecasted purchases of materials used in our manufacturing process. These derivative instruments have been designated and qualify as part of the
Company's commodity cash flow hedging program. The objective of this hedging program is to reduce the variability of cash flows associated with future
purchases of certain commodities. The total notional values of derivatives that have been designated and qualify for this program were $8 million and $9
million as of December 31, 2015 and 2014, respectively.
Our Company monitors our mix of short-term debt and long-term debt regularly. From time to time, we manage our risk to interest rate fluctuations through
the use of derivative financial instruments. The Company has entered into interest rate swap agreements and has designated these instruments as part of the
Company's interest rate cash flow hedging program. The objective of this hedging program is to mitigate the risk of adverse changes in benchmark interest
rates on the Company's future interest payments. The total notional values of these interest rate swap agreements that were designated and qualified for the
Company's interest rate cash flow hedging program were $3,328 million and $4,328 million as of December 31, 2015 and 2014, respectively.
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