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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASURES | 6 Months Ended
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Jun. 30, 2020
Fair Value Disclosures [Abstract] |
Financial Instruments and Fair Value Measures | Note 12. Financial Instruments and Fair Value Measures Our credit, market, foreign currency and interest rate risk management policies are described in Note 15, Financial Instruments and Fair Value Measures of Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:
| June 30, 2020 |  | December 31, 2019
Assets: |  |  |
Foreign currency exchange contracts | $ | 457 |  |  | $ | 291 |
Available for sale investments | 1,514 |  |  | 1,523 |
Interest rate swap agreements | 244 |  |  | 38 |
Cross currency swap agreements | 52 |  |  | 51 |
Liabilities: |  |  |
Foreign currency exchange contracts | $ | 50 |  |  | $ | 21 |
Interest rate swap agreements | — |  |  | 13 |
The foreign currency exchange contracts, interest rate swap agreements, and cross currency swap agreements are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 2. The Company also holds investments in commercial paper, certificates of deposits, and time deposits that are designated as available for sale and are valued using published prices based off observable market data. As such, these investments are classified within level 2. The Company also holds available for sale investments in U.S. government and corporate debt securities valued utilizing published prices based on quoted market pricing, which are classified within level 1. The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables, commercial paper (of which $669 million and $3,513 million was Euro denominated as of June 30, 2020 and December 31, 2019) and short-term borrowings contained in the Consolidated Balance Sheet approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:
| June 30, 2020 |  |  |  | December 31, 2019 |  |
| Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Assets |  |  |  |  |  |  |
Long-term receivables | $ | 148 |  |  | $ | 145 |  |  | $ | 129 |  |  | $ | 127 |
Liabilities |  |  |  |  |  |  |
Long-term debt and related current maturities | $ | 18,558 |  |  | $ | 19,837 |  |  | $ | 12,486 |  |  | $ | 13,578 |
The following table sets forth the amounts on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
Line in the Consolidated Balance Sheet of Hedged Item |  | Carrying Amount of the Hedged Item |  |  |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Item |  |
|  | June 30, 2020 |  | December 31, 2019 |  | June 30, 2020 |  | December 31, 2019
Long-term debt |  | $ | 4,194 |  |  | $ | 3,975 |  |  | $ | 244 |  |  | $ | 25 |
The Company determined the fair value of the long-term receivables by utilizing transactions in the listed markets for identical or similar assets. As such, the fair value of these receivables is considered level 2. The Company determined the fair value of the long-term debt and related current maturities utilizing transactions in the listed markets for identical or similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered level 2. Interest rate swap agreements are designated as hedge relationships with gains or losses on the derivative recognized in Interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. For the three and six months ended June 30, 2020, we recognized $14 million and $219 million of gains in earnings on interest rate swap agreements. For the three and six months ended June 30, 2019, we recognized $37 million and $63 million of gains in earnings on interest rate swap agreements. Gains and losses are fully offset by losses and gains on the underlying debt being hedged. The Company economically hedges its exposure to changes in foreign exchange rates principally with forward contracts. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. For the three and six months ended June 30, 2020, we recognized $217 million of expense and $67 million of income in Other (income) expense. For the three and six months ended June 30, 2019, we recognized $96 million and $49 million of income in Other (income) expense. As of June 30, 2020, cash collateral received that has not been offset against our derivatives of $420 million was recorded in Accrued liabilities and Other assets. The following tables summarize the location and impact to the Consolidated Statement of Operations related to fair value and cash flow hedging relationships:
| Three Months Ended June 30, 2020 |  |  |  |  |  |  |  |
| Revenue |  | Cost of Products Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 7,477 |  |  | $ | 4,163 |  |  | $ | 1,183 |  |  | $ | (291) |  |  | $ | 90 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | (1) |  |  | 3 |  |  | (3) |  |  | (42) |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 4 |  |  | — |  |  | 9 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest Rate Swap Agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (14) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 14 |
| Three Months Ended June 30, 2019 |  |  |  |  |  |  |  |
| Revenue |  | Cost of Products Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 9,243 |  |  | $ | 4,848 |  |  | $ | 1,387 |  |  | $ | (305) |  |  | $ | 85 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | 1 |  |  | 8 |  |  | 1 |  |  | — |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 6 |  |  | — |  |  | 9 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest Rate Swap Agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (37) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 37 |
| Six Months Ended June 30, 2020 |  |  |  |  |  |  |  |
| Revenue |  | Cost of Products Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 15,940 |  |  | $ | 8,537 |  |  | $ | 2,421 |  |  | (608) |  |  | $ | 163 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | (1) |  |  | 30 |  |  | (3) |  |  | (2) |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 8 |  |  | — |  |  | 17 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest rate swap agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (219) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 219 |
| Six Months Ended June 30, 2019 |  |  |  |  |  |  |  |
| Revenue |  | Cost of Products Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 18,127 |  |  | $ | 9,470 |  |  | $ | 2,750 |  |  | $ | (590) |  |  | $ | 170 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | 1 |  |  | 24 |  |  | 1 |  |  | 24 |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 11 |  |  | — |  |  | 18 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest rate swap agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (63) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 63 |
The following table summarizes the amounts of gain or (loss) on net investment hedges recognized in Accumulated other comprehensive income (loss):
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
Derivatives Net Investment Hedging Relationships | 2020 |  | 2019 |  | 2020 |  | 2019
Euro-denominated long-term debt | $ | (62) |  |  | $ | (43) |  |  | $ | 62 |  |  | $ | 26 |
Euro-denominated commercial paper | (15) |  |  | (44) |  |  | 55 |  |  | 27 |
Cross currency swap | 7 |  |  | (8) |  |  | (19) |  |  | 5 |
Foreign currency exchange contracts | (102) |  |  | (2) |  |  | (18) |  |  | 5 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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