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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2023
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):
March 31, 2023 | Level 1 | Level 2 | Level 3 |  | Other 3 | Netting Adjustment | 4 | Fair Value Measurements |
Assets: |  |  |  |  |  |  |  |  |
Equity securities with readily determinable values 1 | $ | 1,742 |  | $ | 175 |  | $ | 8 |  |  | $ | 83 |  | $ | — |  |  | $ | 2,008 |  |
Debt securities 1 | — |  | 1,026 |  | 16 |  |  | — |  | — |  |  | 1,042 |  |
Derivatives 2 | — |  | 239 |  | — |  |  | — |  | (205) |  | 6 | 34 |  | 8
Total assets | $ | 1,742 |  | $ | 1,440 |  | $ | 24 |  |  | $ | 83 |  | $ | (205) |  |  | $ | 3,084 |  |
Liabilities: |  |  |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  | $ | — |  | $ | 1,377 |  | 5 | $ | — |  | $ | — |  |  | $ | 1,377 |  |
Derivatives 2 | 1 |  | 1,787 |  | — |  |  | — |  | (1,611) |  | 7 | 177 |  | 8
Total liabilities | $ | 1 |  | $ | 1,787 |  | $ | 1,377 |  |  | $ | — |  | $ | (1,611) |  |  | $ | 1,554 |  |
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 were 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 the remaining milestone payment related to our acquisition of fairlife in 2020, which is contingent on fairlife achieving certain financial targets through 2024 and, if achieved, is payable in 2025. This milestone payment is based on agreed-upon formulas related to fairlife’s operating results, the resulting value of which is not subject to a ceiling. The fair value was determined using a Monte Carlo valuation model. The Company made a milestone payment of $275 million during the three months ended March 31, 2023. 6 The Company is not obligated to return any cash collateral it has netted against its derivative position. 7 The Company has the right to reclaim $1,406 million in cash collateral it has netted against its derivative position. 8 The Company’s derivative financial instruments were recorded at fair value in our consolidated balance sheet as follows: $34 million in the line item other noncurrent assets and $177 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, 2022 | Level 1 | Level 2 | Level 3 |  | Other 3 | Netting Adjustment | 4 | Fair Value Measurements |
Assets: |  |  |  |  |  |  |  |  |
Equity securities with readily determinable values 1 | $ | 1,801 |  | $ | 169 |  | $ | 15 |  |  | $ | 85 |  | $ | — |  |  | $ | 2,070 |  |
Debt securities 1 | — |  | 975 |  | 8 |  |  | — |  | — |  |  | 983 |  |
Derivatives 2 | 2 |  | 239 |  | — |  |  | — |  | (227) |  | 6 | 14 |  | 8
Total assets | $ | 1,803 |  | $ | 1,383 |  | $ | 23 |  |  | $ | 85 |  | $ | (227) |  |  | $ | 3,067 |  |
Liabilities: |  |  |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  | $ | — |  | $ | 1,590 |  | 5 | $ | — |  | $ | — |  |  | $ | 1,590 |  |
Derivatives 2 | 4 |  | 1,962 |  | — |  |  | — |  | (1,678) |  | 7 | 288 |  | 8
Total liabilities | $ | 4 |  | $ | 1,962 |  | $ | 1,590 |  |  | $ | — |  | $ | (1,678) |  |  | $ | 1,878 |  |
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 were 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 was not obligated to return any cash collateral it had netted against its derivative position. 7 The Company had the right to reclaim $1,447 million in cash collateral it had netted against its derivative position. 8 The Company’s derivative financial instruments were recorded at fair value in our consolidated balance sheet as follows: $14 million in the line item other noncurrent assets and $288 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, excluding the contingent consideration liability, were not significant for the three months ended March 31, 2023 and April 1, 2022. 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 months ended March 31, 2023 and April 1, 2022. Nonrecurring Fair Value Measurements We did not recognize any gains or losses on assets measured at fair value on a nonrecurring basis during the three months ended March 31, 2023. We recognized a net loss of $24 million on assets measured at fair value on a nonrecurring basis during the three months ended April 1, 2022. 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 March 31, 2023, the carrying value and fair value of our long-term debt, including the current portion, were $36,945 million and $32,711 million, respectively. As of December 31, 2022, the carrying value and fair value of our long-term debt, including the current portion, were $36,776 million and $32,698 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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