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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2022
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The following tables summarize assets and liabilities measured at fair value on a recurring basis (in millions):
September 30, 2022 | Level 1 | Level 2 | Level 3 |  | Other 3 | Netting Adjustment | 4 | Fair Value Measurements |
Assets: |  |  |  |  |  |  |  |  |
Equity securities with readily determinable values 1 | $ | 1,719 |  | $ | 185 |  | $ | 17 |  |  | $ | 91 |  | $ | — |  |  | $ | 2,012 |  |
Debt securities 1 | — |  | 1,881 |  | 9 |  |  | — |  | — |  |  | 1,890 |  |
Derivatives 2 | 72 |  | 648 |  | — |  |  | — |  | (537) |  |  | 183 |  | 7
Total assets | $ | 1,791 |  | $ | 2,714 |  | $ | 26 |  |  | $ | 91 |  | $ | (537) |  |  | $ | 4,085 |  |
Liabilities: |  |  |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  | $ | — |  | $ | 1,561 |  | 5 | $ | — |  | $ | — |  |  | $ | 1,561 |  |
Derivatives 2 | 6 |  | 1,891 |  | — |  |  | — |  | (1,817) |  | 6 | 80 |  | 7
Total liabilities | $ | 6 |  | $ | 1,891 |  | $ | 1,561 |  |  | $ | — |  | $ | (1,817) |  |  | $ | 1,641 |  |
1 Refer 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 derivatives 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 net 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 Represents the fair value of future milestone payments related to our acquisition of fairlife in 2020, which are contingent on fairlife achieving certain financial targets through 2024 and, if achieved, are payable in 2023 and 2025. These milestone payments are based on agreed-upon formulas related to fairlife’s operating results, the resulting values of which are not subject to a ceiling. The fair value was determined using a Monte Carlo valuation model. 6 The Company has the right to reclaim $1,325 million in cash collateral it has netted against its derivative positions. 7 The Company’s derivative financial instruments are recorded at fair value in our consolidated balance sheet as follows: $90 million in the line item prepaid expenses and other current assets, $93 million in the line item other noncurrent assets and $80 million in the line item other noncurrent liabilities. Refer to Note 6 for additional information related to the composition of our derivatives portfolio.
December 31, 2021 | Level 1 | Level 2 | Level 3 |  | Other 3 | Netting Adjustment | 4 | Fair Value Measurements |
Assets: |  |  |  |  |  |  |  |  |
Equity securities with readily determinable values 1 | $ | 2,372 |  | $ | 230 |  | $ | 17 |  |  | $ | 104 |  | $ | — |  |  | $ | 2,723 |  |
Debt securities 1 | — |  | 1,556 |  | 33 |  |  | — |  | — |  |  | 1,589 |  |
Derivatives 2 | 69 |  | 588 |  | — |  |  | — |  | (459) |  | 6 | 198 |  | 8
Total assets | $ | 2,441 |  | $ | 2,374 |  | $ | 50 |  |  | $ | 104 |  | $ | (459) |  |  | $ | 4,510 |  |
Liabilities: |  |  |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  | $ | — |  | $ | 590 |  | 5 | $ | — |  | $ | — |  |  | $ | 590 |  |
Derivatives 2 | — |  | 96 |  | — |  |  | — |  | (82) |  | 7 | 14 |  | 8
Total liabilities | $ | — |  | $ | 96 |  | $ | 590 |  |  | $ | — |  | $ | (82) |  |  | $ | 604 |  |
1 Refer 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 derivatives 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 net 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 Represents the fair value of future milestone payments related to our acquisition of fairlife in 2020, which are contingent on fairlife achieving certain financial targets through 2024 and, if achieved, are payable in 2023 and 2025. These milestone payments are based on agreed-upon formulas related to fairlife’s operating results, the resulting values of which are not subject to a ceiling. The fair value was determined using a Monte Carlo valuation model. 6 The Company is obligated to return $331 million in cash collateral it has netted against its derivative positions. 7 The Company does not have the right to reclaim any cash collateral it has netted against its derivative positions. 8 The Company’s derivative financial instruments are recorded at fair value in our consolidated balance sheet as follows: $198 million in the line item other noncurrent assets and $14 million in the line item other noncurrent liabilities. Refer to Note 6 for additional information related to the composition of our derivatives portfolio. Gross realized and unrealized gains and losses on Level 3 assets and liabilities were not significant for the three and nine months ended September 30, 2022 and October 1, 2021. The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. Gross transfers between levels within the hierarchy were not significant for the three and nine months ended September 30, 2022 and October 1, 2021. Nonrecurring Fair Value Measurements The gains and losses on assets measured at fair value on a nonrecurring basis are summarized in the following table (in millions):
| Gains (Losses) |
| Three Months Ended |  | Nine Months Ended |
| September 30, 2022 |  | October 1, 2021 |  | September 30, 2022 |  | October 1, 2021 |
Assets held for sale | $ | — |  |  | $ | (266) |  | 2 | $ | — |  |  | $ | (266) |  | 2
Other-than-temporary impairment charges | — |  |  | — |  |  | (96) |  | 3 | — |  |
Impairment of intangible assets | (57) |  | 1 | — |  |  | (57) |  | 1 | — |  |
Valuation of shares in equity method investee | — |  |  | — |  |  | (24) |  | 4 | — |  |
Total | $ | (57) |  |  | $ | (266) |  |  | $ | (177) |  |  | $ | (266) |  |
1 During the three and nine months ended September 30, 2022, the Company recorded an impairment charge of $57 million related to a trademark in Asia Pacific, which was primarily driven by a change in brand strategy resulting in revised projections of future operating results for the trademark. The fair value of this trademark was derived using discounted cash flow analyses based on Level 3 inputs. 2 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. During the three and nine months ended October 1, 2021, the Company recorded charges of $266 million in the line item other income (loss) — net related to the restructuring of our manufacturing operations in the United States. These charges, which were calculated based on Level 3 inputs, primarily impacted the line item property, plant and equipment in our consolidated balance sheet. 3 The Company recorded an other-than-temporary impairment charge of $96 million during the nine months ended September 30, 2022 related to an equity method investee in Russia. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results. 4 During the nine months ended September 30, 2022, we recognized a net loss of $24 million on assets measured at fair value on a nonrecurring basis. The net loss was recorded as a result of an equity method investee issuing additional shares of its stock. Accordingly, the Company is required to treat this type of transaction as if the Company had sold a proportionate share of its investment. This net loss was determined using Level 2 inputs and primarily resulted from the recognition of cumulative translation losses. Other Fair Value Disclosures The carrying values of cash and cash equivalents; short-term investments; trade accounts receivable; accounts payable and accrued expenses; and loans and notes payable approximate their fair values because of the relatively short-term maturities of these financial instruments. The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for those instruments. Where quoted prices are not available, the fair value is estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of the debt instruments. As of September 30, 2022, the carrying value and fair value of our long-term debt, including the current portion, were $36,191 million and $30,942 million, respectively. As of December 31, 2021, the carrying value and fair value of our long-term debt, including the current portion, were $39,454 million and $40,311 million, respectively.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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