Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At December 31, 2017, the Company was a party to 26 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below.



	2017
Debt Instrument	Par Value of Debt		Number of Interest Rate Swaps Held	Total Swap Notional Amount
1.30% notes due 2018	$	1,000	4	$	1,000
5.00% notes due 2019	1,250		3	550
1.85% notes due 2020	1,250		5	1,250
3.875% notes due 2021	1,150		5	1,150
2.40% notes due 2022	1,000		4	1,000
2.35% notes due 2022	1,250		5	1,250

Fair Value of Derivatives on a Gross Basis Segregated Between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments as of December 31:



		2017						2016
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S. Dollar Notional
	Balance Sheet Caption	Asset		Liability		U.S. Dollar Notional		Asset		Liability		U.S. Dollar Notional
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Other assets	$	2	$	—	$	550	$	20	$	—	$	2,700
Interest rate swap contracts	Accrued and other current liabilities	—		3		1,000		—		—		—
Interest rate swap contracts	Other noncurrent liabilities	—		52		4,650		—		29		3,500
Foreign exchange contracts	Other current assets	51		—		4,216		616		—		6,063
Foreign exchange contracts	Other assets	38		—		1,936		129		—		2,075
Foreign exchange contracts	Accrued and other current liabilities	—		71		2,014		—		1		48
Foreign exchange contracts	Other noncurrent liabilities	—		1		20		—		1		12
		$	91	$	127	$	14,386	$	765	$	31	$	14,398
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	Other current assets	$	39	$	—	$	3,778	$	230	$	—	$	8,210
Foreign exchange contracts	Accrued and other current liabilities	—		90		7,431		—		103		2,931
		$	39	$	90	$	11,209	$	230	$	103	$	11,141
		$	130	$	217	$	25,595	$	995	$	134	$	25,539

Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis

The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes at December 31:



	2017						2016
	Asset			Liability			Asset			Liability
Gross amounts recognized in the consolidated balance sheet	$	130		$	217		$	995		$	134
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet	(94		)	(94		)	(131		)	(131		)
Cash collateral (received) posted	(3		)	—			(529		)	—
Net amounts	$	33		$	123		$	335		$	3

Location and Pretax Gain or Loss Amounts for Derivatives

The table below provides information on the location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a foreign currency cash flow hedging relationship, (iii) designated in a foreign currency net investment hedging relationship and (iv) not designated in a hedging relationship:



Years Ended December 31	2017			2016			2015
Derivatives designated in a fair value hedging relationship
Interest rate swap contracts
Amount of loss (gain) recognized in Other (income) expense, net on derivatives ⁽¹⁾	$	43		$	28		$	(14	)
Amount of (gain) loss recognized in Other (income) expense, net on hedged item ⁽¹⁾	(48		)	(29		)	7
Derivatives designated in foreign currency cash flow hedging relationships
Foreign exchange contracts
Amount of gain reclassified from AOCI to Sales	(138		)	(311		)	(724		)
Amount of loss (gain) recognized in OCI on derivatives	561			(210		)	(526		)
Derivatives designated in foreign currency net investment hedging relationships
Foreign exchange contracts
Amount of gain recognized in Other (income) expense, net on derivatives ⁽²⁾	—			(1		)	(4		)
Amount of loss (gain) recognized in OCI on derivatives	—			2			(10		)
Derivatives not designated in a hedging relationship
Foreign exchange contracts
Amount of loss (gain) recognized in Other (income) expense, net on derivatives ⁽³⁾	110			132			(461		)
Amount of gain recognized in Sales	(3		)	—			(1		)


⁽¹⁾	There was $5 million, $1 million and $7 million of ineffectiveness on the hedge during 2017, 2016 and 2015, respectively.


⁽²⁾	There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing.


⁽³⁾	These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

Information on Available-for-Sale Investments

Information on investments in debt and equity securities at December 31 is as follows:



	2017									2016
	Fair Value		Amortized Cost		Gross Unrealized					Fair Value		Amortized Cost		Gross Unrealized
	Fair Value		Amortized Cost		Gains		Losses			Fair Value		Amortized Cost		Gains		Losses
Corporate notes and bonds	$	9,806	$	9,837	$	9	$	(40	)	$	10,577	$	10,601	$	15	$	(39	)
U.S. government and agency securities	2,042		2,059		—		(17		)	2,232		2,244		1		(13		)
Asset-backed securities	1,542		1,548		1		(7		)	1,376		1,380		1		(5		)
Foreign government bonds	733		739		—		(6		)	519		521		—		(2		)
Mortgage-backed securities	626		634		1		(9		)	796		801		1		(6		)
Commercial paper	159		159		—		—			4,330		4,330		—		—
Equity securities	275		265		16		(6		)	349		281		71		(3		)
	$	15,183	$	15,241	$	27	$	(85	)	$	20,179	$	20,158	$	89	$	(68	)

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis at December 31 are summarized below:



	Fair Value Measurements Using								Fair Value Measurements Using
	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	2017								2016
Assets
Investments
Corporate notes and bonds	$	—	$	9,678	$	—	$	9,678	$	—	$	10,389	$	—	$	10,389
U.S. government and agency securities	68		1,767		—		1,835		29		1,890		—		1,919
Asset-backed securities ⁽¹⁾	—		1,476		—		1,476		—		1,257		—		1,257
Foreign government bonds	—		732		—		732		—		518		—		518
Mortgage-backed securities ⁽¹⁾	—		547		—		547		—		628		—		628
Commercial paper	—		159		—		159		—		4,330		—		4,330
Equity securities	104		—		—		104		201		—		—		201
	172		14,359		—		14,531		230		19,012		—		19,242
Other assets ⁽²⁾
U.S. government and agency securities	—		207		—		207		—		313		—		313
Corporate notes and bonds	—		128		—		128		—		188		—		188
Mortgage-backed securities ⁽¹⁾	—		79		—		79		—		168		—		168
Asset-backed securities ⁽¹⁾	—		66		—		66		—		119		—		119
Foreign government bonds	—		1		—		1		—		1		—		1
Equity securities	171		—		—		171		148		—		—		148
	171		481		—		652		148		789		—		937
Derivative assets ⁽³⁾
Purchased currency options	—		80		—		80		—		644		—		644
Forward exchange contracts	—		48		—		48		—		331		—		331
Interest rate swaps	—		2		—		2		—		20		—		20
	—		130		—		130		—		995		—		995
Total assets	$	343	$	14,970	$	—	$	15,313	$	378	$	20,796	$	—	$	21,174
Liabilities
Other liabilities
Contingent consideration	$	—	$	—	$	935	$	935	$	—	$	—	$	891	$	891
Derivative liabilities ⁽²⁾
Forward exchange contracts	—		162		—		162		—		93		—		93
Interest rate swaps	—		55		—		55		—		29		—		29
Written currency options	—		—		—		—		—		12		—		12
	—		217		—		217		—		134		—		134
Total liabilities	$	—	$	217	$	935	$	1,152	$	—	$	134	$	891	$	1,025

⁽¹⁾

Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by auto loan, credit card and student loan receivables, with weighted-average lives of primarily 5 years or less. Mortgage-backed securities represent AAA-rated securities issued or unconditionally guaranteed as to payment of principal and interest by U.S. government agencies.


⁽²⁾	Investments included in other assets are restricted as to use, primarily for the payment of benefits under employee benefit plans.


⁽³⁾	The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

Summarized Information about the Changes in Liabilities for Contingent Consideration

Summarized information about the changes in liabilities for contingent consideration is as follows:



	2017			2016
Fair value January 1	$	891		$	590
Changes in estimated fair value ⁽¹⁾	141			(407		)
Additions	3			733
Payments	(100		)	(25		)
Fair value December 31⁽²⁾	$	935		$	891

⁽¹⁾ Recorded in Research and development expenses, Materials and production costs and Other (income) expense, net. Includes cumulative translation adjustments.

⁽²⁾ Includes $315 million recorded as a current liability for amounts expected to be paid within the next 12 months.