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Derivative Instruments
 3 Months Ended
Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments DERIVATIVE INSTRUMENTS
We use operational and economic hedges, foreign currency
exchange forward contracts, net investment hedges (both
derivative and non-derivative financial instruments) and interest
rate derivative instruments to manage the impact of currency
exchange and interest rate fluctuations on earnings, cash flow
and equity. We do not enter into derivative instruments for
speculative purposes. We are exposed to potential credit loss in
the event of nonperformance by counterparties on our
outstanding derivative instruments but do not anticipate
nonperformance by any of our counterparties. Should a
counterparty default, our maximum loss exposure is the asset
balance of the instrument. We have not changed our hedging
strategies, accounting practices or objectives from those
disclosed in our Annual Report on Form 10-K for 2024.
Foreign Currency Hedges
March 2025
Cash Flow
Net
Investment
Non-
Designated
Total
Gross notional amount
$1,617
$2,436
$4,060
$8,113
Maximum term in years
9.5
Fair value:
Other current assets
$25
$11
$21
$57
Other noncurrent assets
1
7
—
8
Other current liabilities
(16)
(5)
(28)
(49)
Other noncurrent
liabilities
(1)
(17)
—
(18)
Total fair value
$9
$(4)
$(7)
$(2)
December 2024
Cash Flow
Net
Investment
Non-
Designated
Total
Gross notional amount
$1,588
$2,338
$5,164
$9,090
Maximum term in years
9.7
Fair value:
Other current assets
$43
$24
$119
$186
Other noncurrent assets
4
35
—
39
Other current liabilities
(29)
—
(41)
(70)
Other noncurrent
liabilities
(3)
(4)
—
(7)
Total fair value
$15
$55
$78
$148
We had €2.3 billion at March 31, 2025 and December 31, 2024 in
certain forward currency contracts designated as net investment
hedges, for which the maximum term is 9.5 years, to hedge a
portion of our investments in certain of our entities with functional
currencies denominated in Euros. In addition to these derivative
financial instruments designated as net investment hedges, we
had €5.0 billion at March 31, 2025 and December 31, 2024 of
senior unsecured notes designated as net investment hedges to
selectively hedge portions of our investment in certain
international subsidiaries. The currency effects of our Euro-
denominated senior unsecured notes are reflected in AOCI within
shareholders' equity where they offset gains and losses recorded
on our net investment in international subsidiaries.
The total after-tax gain (loss) recognized in OCI related to
designated net investment hedges was ($218) in the three
months 2025.
Currency Exchange Rate Gains (Losses) Recognized in Net
Earnings
Three Months
Derivative
Instrument
Recognized in:
2025
2024
Cash Flow
Cost of sales
$2
$10
Net Investment
Other income (expense), net
11
8
Non-Designated
Other income (expense), net
13
3
Total
$26
$21
Pretax gains (losses) on derivatives designated as cash flow
hedges of $13 and net investment hedges of $40 recorded in
AOCI are expected to be reclassified to cost of sales and other
income (expense), net in earnings within 12 months of March 31,
2025. This cash flow hedge reclassification is primarily due to the
sale of inventory that includes previously hedged purchases. A
component of the AOCI amounts related to net investment
hedges is reclassified over the life of the hedge instruments as
we elected to exclude the initial value of the component related to
the spot-forward difference from the effectiveness assessment.
Interest Rate Hedges
Pretax gains (losses) of $3 recorded in AOCI related to interest
rate hedges closed in conjunction with debt issuances are
expected to be reclassified to other income (expense), net in
earnings within 12 months of March 31, 2025. The cash flow
effect of interest rate hedges is recorded in cash flow from
operations.