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Derivatives (Tables) | 3 Months Ended
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Mar. 31, 2019
Derivatives |
Gain (loss) on derivative instruments designated as cash flow hedges |
|  | Pretax Gain (Loss) |  |  |  |  |  |
|  | Recognized in Other |  | Pretax Gain (Loss) Reclassified |
|  | Comprehensive |  | from Accumulated Other |
Three months ended March 31, 2019 |  | Income on Derivative |  | Comprehensive Income into Income |
(Millions) |  | Amount |  | Location |  | Amount |
Foreign currency forward/option contracts |  | $ | 30 |  | Cost of sales |  | $ | 7 |
Interest rate swap contracts |  |  | (17) |  | Interest expense |  |  | — |
Total |  | $ | 13 |  |  |  | $ | 7 |
|  |  |  | Pretax Gain (Loss) Recognized in |  |  |
|  | Pretax Gain (Loss) |  | Income on Effective Portion of |  | Ineffective Portion of Gain |
|  | Recognized in Other |  | Derivative as a Result of |  | (Loss) on Derivative and |
|  | Comprehensive |  | Reclassification from |  | Amount Excluded from |
|  | Income on Effective |  | Accumulated Other |  | Effectiveness Testing |
Three months ended March 31, 2018 |  | Portion of Derivative |  | Comprehensive Income |  | Recognized in Income |
(Millions) |  | Amount |  | Location |  | Amount |  | Location |  | Amount |
Foreign currency forward/option contracts |  | $ | (79) |  | Cost of sales |  | $ | (34) |  | Cost of sales |  | $ | — |
Interest rate swap contracts |  |  | (3) |  | Interest expense |  |  | — |  | Interest expense |  |  | — |
Total |  | $ | (82) |  |  |  | $ | (34) |  |  |  | $ | — |
Gain (loss) on derivative instruments designated as fair value hedges |
|  | Gain (Loss) on Derivative |  | Gain (Loss) on Hedged Item |
Three months ended March 31, 2018 |  | Recognized in Income |  | Recognized in Income |
(Millions) |  | Location |  | Amount |  | Location |  | Amount |
Interest rate swap contracts |  | Interest expense |  | $ | (11) |  | Interest expense |  | $ | 11 |
Total |  |  |  | $ | (11) |  |  |  | $ | 11 |
The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
|  |  |  | Cumulative Amount of Fair Value Hedging |
|  | Carrying Value of the |  | Adjustment Included in the Carrying Value |
|  | Hedged Liabilities (in millions) |  | of the Hedged Liabilities (in millions) |
Location on the Consolidated Balance Sheet |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2019 |  | December 31, 2018 |
Short-term borrowings and current portion of long-term debt |  | $ | 598 |  | $ | 596 |  | $ | (1) |  | $ | (4) |
Long-term debt |  |  | 1,272 |  |  | 1,276 |  |  | 20 |  |  | 18 |
Total |  | $ | 1,870 |  | $ | 1,872 |  | $ | 19 |  | $ | 14 |
Gain (loss) on derivative and non-derivative instruments designated as net investment hedges |
|  | Pretax Gain (Loss) |  |  |  |  |  |
|  | Recognized as |  |  |  |  |  |
|  | Cumulative Translation |  | Amount Excluded |
|  | within Other |  | from Effectiveness Testing |
Three months ended March 31, 2019 |  | Comprehensive Income |  | Recognized in Income |
(Millions) |  | Amount |  | Location |  | Amount |
Foreign currency denominated debt |  | $ | 92 |  | Cost of sales |  | $ | — |
Foreign currency forward contracts |  |  | 15 |  | Cost of sales |  |  | 5 |
Total |  | $ | 107 |  |  |  | $ | 5 |
|  | Pretax Gain (Loss) |  |  |  |  |  |
|  | Recognized as |  |  |  |  |  |
|  | Cumulative Translation |  |  |  |  |  |
|  | within Other |  | Ineffective Portion of Gain (Loss) on |
|  | Comprehensive Income |  | Instrument and Amount Excluded |
|  | on Effective Portion of |  | from Effectiveness Testing |
Three months ended March 31, 2018 |  | Instrument |  | Recognized in Income |
(Millions) |  | Amount |  | Location |  | Amount |
Foreign currency denominated debt |  | $ | (128) |  | Cost of sales |  | $ | (2) |
Foreign currency forward contracts |  |  | (6) |  | Cost of sales |  |  | (1) |
Total |  | $ | (134) |  |  |  | $ | (3) |
Gain (loss) on derivative instruments not designated as hedging instruments |
|  | Three months ended March 31, 2019 |
|  | Gain (Loss) on Derivative Recognized in |
|  | Income |
(Millions) |  | Location |  | Amount |
Foreign currency forward/option contracts |  | Cost of sales |  | $ | (2) |
Foreign currency forward contracts |  | Interest expense |  |  | (8) |
Total |  |  |  | $ | (10) |
|  | Three months ended March 31, 2018 |
|  | Gain (Loss) on Derivative Recognized in |
|  | Income |
(Millions) |  | Location |  | Amount |
Foreign currency forward/option contracts |  | Cost of sales |  | $ | (3) |
Foreign currency forward contracts |  | Interest expense |  |  | 23 |
Total |  |  |  | $ | 20 |
Location in consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in cash flow or fair value hedging relationship |
|  | Location and Amount of Gain (Loss) Recognized in Income |
|  | Three months ended March 31, 2019 |
(Millions) |  | Cost of sales |  | Other expense (income), net |
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded |  | $ | 4,310 |  | $ | 48 |
The effects of fair value and cash flow hedging: |  |  |  |  |  |  |
Gain or (loss) on cash flow hedging relationships: |  |  |  |  |  |  |
Foreign currency forward/option contracts: |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income |  | $ | 7 |  | $ | — |
Interest rate swap contracts: |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income |  |  | — |  |  | — |
Gain or (loss) on fair value hedging relationships: |  |  |  |  |  |  |
Interest rate swap contracts: |  |  |  |  |  |  |
Hedged items |  | $ | — |  | $ | (5) |
Derivatives designated as hedging instruments |  |  | — |  |  | 5 |
Location and Fair Value of Derivative Instruments |
|  | Gross |  | Assets |  | Liabilities |
March 31, 2019 |  | Notional |  |  |  | Fair |  |  |  | Fair |
(Millions) |  | Amount |  | Location |  | Value Amount |  | Location |  | Value Amount |
Derivatives designated as |  |  |  |  |  |  |  |  |  |  |  |  |  |
hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward/option contracts |  | $ | 2,742 |  | Other current assets |  | $ | 88 |  | Other current liabilities |  | $ | 11 |
Foreign currency forward/option contracts |  |  | 1,100 |  | Other assets |  |  | 53 |  | Other liabilities |  |  | 1 |
Interest rate swap contracts |  |  | 600 |  | Other current assets |  |  | — |  | Other current liabilities |  |  | 1 |
Interest rate swap contracts |  |  | 1,453 |  | Other assets |  |  | 19 |  | Other liabilities |  |  | 31 |
Total derivatives designated as hedging instruments |  |  |  |  |  |  | $ | 160 |  |  |  | $ | 44 |
Derivatives not designated as |  |  |  |  |  |  |  |  |  |  |  |  |  |
hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward/option contracts |  | $ | 2,925 |  | Other current assets |  | $ | 11 |  | Other current liabilities |  | $ | 12 |
Total derivatives not designated as hedging instruments |  |  |  |  |  |  | $ | 11 |  |  |  | $ | 12 |
Total derivative instruments |  |  |  |  |  |  | $ | 171 |  |  |  | $ | 56 |
|  | Gross |  | Assets |  | Liabilities |
December 31, 2018 |  | Notional |  |  |  | Fair |  |  |  | Fair |
(Millions) |  | Amount |  | Location |  | Value Amount |  | Location |  | Value Amount |
Derivatives designated as |  |  |  |  |  |  |  |  |  |  |  |  |  |
hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward/option contracts |  | $ | 2,277 |  | Other current assets |  | $ | 74 |  | Other current liabilities |  | $ | 12 |
Foreign currency forward/option contracts |  |  | 1,099 |  | Other assets |  |  | 39 |  | Other liabilities |  |  | 4 |
Interest rate swap contracts |  |  | 1,000 |  | Other current assets |  |  | — |  | Other current liabilities |  |  | 14 |
Interest rate swap contracts |  |  | 1,403 |  | Other assets |  |  | 19 |  | Other liabilities |  |  | 17 |
Total derivatives designated as hedging instruments |  |  |  |  |  |  | $ | 132 |  |  |  | $ | 47 |
Derivatives not designated as |  |  |  |  |  |  |  |  |  |  |  |  |  |
hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward/option contracts |  | $ | 2,484 |  | Other current assets |  | $ | 14 |  | Other current liabilities |  | $ | 6 |
Total derivatives not designated as hedging instruments |  |  |  |  |  |  | $ | 14 |  |  |  | $ | 6 |
Total derivative instruments |  |  |  |  |  |  | $ | 146 |  |  |  | $ | 53 |
Offsetting Assets | Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties
|  |  |  | Gross Amounts not Offset in the |  |  |  |
|  |  |  | Consolidated Balance Sheet that are Subject |  |  |  |
|  | Gross Amount of |  | to Master Netting Agreements |  |  |  |
|  | Derivative Assets |  | Gross Amount of |  |  |  |  |
|  | Presented in the |  | Eligible Offsetting |  |  |  |  |
March 31, 2019 |  | Consolidated |  | Recognized |  | Cash Collateral |  | Net Amount of |
(Millions) |  | Balance Sheet |  | Derivative Liabilities |  | Received |  | Derivative Assets |
Derivatives subject to master netting agreements |  | $ | 171 |  | $ | 39 |  | $ | — |  | $ | 132 |
Derivatives not subject to master netting agreements |  |  | — |  |  |  |  |  |  |  |  | — |
Total |  | $ | 171 |  |  |  |  |  |  |  | $ | 132 |
December 31, 2018 |  |  |  |  |  |  |  |  |
(Millions) |  |  |  |  |  |  |  |  |
Derivatives subject to master netting agreements |  | $ | 146 |  | $ | 38 |  | $ | — |  | $ | 108 |
Derivatives not subject to master netting agreements |  |  | — |  |  |  |  |  |  |  |  | — |
Total |  | $ | 146 |  |  |  |  |  |  |  | $ | 108 |
Offsetting Liabilities | Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties
|  |  |  | Gross Amounts not Offset in the |  |  |  |
|  |  |  | Consolidated Balance Sheet that are Subject |  |  |  |
|  | Gross Amount of |  | to Master Netting Agreements |  |  |  |
|  | Derivative Liabilities |  | Gross Amount of |  |  |  |  |
|  | Presented in the |  | Eligible Offsetting |  |  |  |  |
March 31, 2019 |  | Consolidated |  | Recognized |  | Cash Collateral |  | Net Amount of |
(Millions) |  | Balance Sheet |  | Derivative Assets |  | Pledged |  | Derivative Liabilities |
Derivatives subject to master netting agreements |  | $ | 56 |  | $ | 39 |  | $ | — |  | $ | 17 |
Derivatives not subject to master netting agreements |  |  | — |  |  |  |  |  |  |  |  | — |
Total |  | $ | 56 |  |  |  |  |  |  |  | $ | 17 |
December 31, 2018 |  |  |  |  |  |  |  |  |
(Millions) |  |  |  |  |  |  |  |  |
Derivatives subject to master netting agreements |  | $ | 53 |  | $ | 38 |  | $ | — |  | $ | 15 |
Derivatives not subject to master netting agreements |  |  | — |  |  |  |  |  |  |  |  | — |
Total |  | $ | 53 |  |  |  |  |  |  |  | $ | 15 |

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