XML 23 R11.htm IDEA: XBRL DOCUMENT v3.25.3
Derivative Instruments
 9 Months Ended
Sep. 30, 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
September 2025
Cash Flow
Net
Investment
Non-
Designated
Total
Gross notional amount
$1,235
$2,643
$3,483
$7,361
Maximum term in years
9.0
Fair value:
Other current assets
$34
$—
$9
$43
Other noncurrent assets
1
—
—
1
Other current liabilities
(8)
(54)
(47)
(109)
Other noncurrent
liabilities
—
(119)
—
(119)
Total fair value
$27
$(173)
$(38)
$(184)
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 September 30, 2025 and December 31,
2024 in certain forward currency contracts designated as net
investment hedges, for which the maximum term is 9.0 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 September 30, 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.
In the nine months 2024 we settled certain foreign currency
forward contracts designated as net investment hedges resulting
in cash proceeds of $99. The amounts in AOCI related to settled
net investment hedges will remain in AOCI until the hedged
investment is either sold or substantially liquidated.
The total after-tax gain (loss) recognized in OCI related to
designated net investment hedges was ($709) in the nine months
2025.
Currency Exchange Rate Gains (Losses) Recognized in Net
Earnings
Three Months
Nine Months
Derivative
Instrument
Recognized
in:
2025
2024
2025
2024
Cash Flow
Cost of sales
$8
$8
$13
$28
Net
Investment
Other income
(expense), net
11
8
33
24
Non-
Designated
Other income
(expense), net
3
20
31
33
Total
$22
$36
$77
$85
Pretax gains (losses) on derivatives designated as cash flow
hedges of $39 and net investment hedges of $35 recorded in
AOCI are expected to be reclassified to cost of sales and other
income (expense), net in earnings within 12 months of
September 30, 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 $5 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 September 30, 2025. The cash flow
effect of interest rate hedges is recorded in cash flow from
operations.