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Financial Instruments (Tables)
 3 Months Ended
Mar. 31, 2014
Fair Value of Derivatives Instruments

Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013 as follows:

 

                                                                           
     March 31, 2014      December 31, 2013  
     Asset      Liability      Asset      Liability  
     Derivatives      Derivatives      Derivatives      Derivatives  
     (in millions)  

Derivatives designated as
hedging instruments:

            

Foreign exchange contracts

    $ 3       $ 7       $ 3       $ 11   

Commodity contracts

      38         11         2         3   

Interest rate contracts

      136         –         209         –   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 177       $ 18       $ 214       $ 14   
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivatives not designated as
hedging instruments:

            

Foreign exchange contracts

    $ 46       $ 22       $ 84       $ 8   

Commodity contracts

      103         76         60         51   

Interest rate contracts

      59         36         64         38   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 208       $ 134       $ 208       $ 97   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fair value

    $ 385       $ 152       $ 422       $ 111   
  

 

 

     

 

 

     

 

 

     

 

 

  
Notional Values of Derivative Instruments

The net notional values of our derivative instruments as of March 31, 2014 and December 31, 2013 were:

 

                                     
     Notional Amount  
     March 31,      December 31,  
     2014      2013  
     (in millions)  

Foreign exchange contracts:

      

Intercompany loans and forecasted interest payments

    $ 4,317       $ 4,369   

Forecasted transactions

      2,205         2,565   

Commodity contracts

      796         805   

Interest rate contracts

      2,278         2,273   

Net investment hedge – euro notes

      4,475         4,466   

Net investment hedge – pound sterling notes

      1,083         1,076   
Hedges of Net Investments in International Operations

After-tax gains / (losses) related to hedges of net investments in international operations in the form of euro and pound sterling-denominated debt were:

 

                                                        
     For the Three Months Ended      Location of
Gain / (Loss)
Recognized in
AOCI
     March 31,     
     2014     2013     
     (in millions)       

Euro notes

    $ (5 )    $ 20       Currency Translation

Pound sterling notes

      (4 )      44       Adjustment
Derivative
  
Schedule of Derivative Instruments Fair Value and Measurement Inputs

The fair value (asset / (liability)) of our derivative instruments at March 31, 2014 were determined using:

 

                                                                           
            Quoted Prices in                
            Active Markets      Significant      Significant  
     Total      for Identical      Other Observable      Unobservable  
     Fair Value of Net      Assets      Inputs      Inputs  
     Asset / (Liability)      (Level 1)      (Level 2)      (Level 3)  
     (in millions)  

Foreign exchange contracts

    $ 20       $ –       $ 20       $ –   

Commodity contracts

      54         30         24         –   

Interest rate contracts

      159         –         159         –   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivatives

    $ 233       $ 30       $ 203       $ –   
  

 

 

     

 

 

     

 

 

     

 

 

  

The fair value (asset / (liability)) of our derivative instruments at December 31, 2013 were determined using:

 

                                                                           
            Quoted Prices in               
            Active Markets     Significant      Significant  
     Total      for Identical     Other Observable      Unobservable  
     Fair Value of Net      Assets     Inputs      Inputs  
     Asset / (Liability)      (Level 1)     (Level 2)      (Level 3)  
     (in millions)  

Foreign exchange contracts

    $ 68       $ –      $ 68       $ –   

Commodity contracts

      8         (4 )      12         –   

Interest rate contracts

      235         –        235         –   
  

 

 

     

 

 

    

 

 

     

 

 

  

Total derivatives

    $ 311       $ (4 )    $ 315       $ –   
  

 

 

     

 

 

    

 

 

     

 

 

  
Cash Flow Hedges
  
Schedule of Cash Flow Hedges Effect on Accumulated Other Comprehensive Income, Net of Taxes

Cash flow hedge activity, net of taxes, within accumulated other comprehensive earnings / (losses) included:

 

                                     
     For the Three Months Ended  
   March 31,  
     2014     2013  
     (in millions)  

Accumulated gain / (loss) at beginning of period

    $ 117      $ (38 ) 

Transfer of realized losses / (gains) in fair value to earnings

      (1 )      17   

Unrealized gain / (loss) in fair value

      (34 )      21   
  

 

 

    

 

 

  

Accumulated gain / (loss) at March 31

    $ 82      $ —     
  

 

 

    

 

 

  
Schedule of Effects of Derivative Instruments

After-tax gains / (losses) reclassified from accumulated other comprehensive earnings / (losses) into net earnings were:

 

                                     
     For the Three Months Ended  
     March 31,  
     2014     2013  
     (in millions)  

Foreign exchange contracts – forecasted transactions

    $ (2 )    $ (8 ) 

Commodity contracts

      5        (9 ) 

Interest rate contracts

      (2 )      —     
  

 

 

    

 

 

  

Total

    $ 1      $ (17 ) 
  

 

 

    

 

 

  

After-tax gains / (losses) recognized in other comprehensive earnings / (losses) were:

 

                                     
     For the Three Months Ended  
     March 31,  
     2014     2013  
     (in millions)  

Foreign exchange contracts – forecasted transactions

    $ 2      $ 6   

Commodity contracts

      11        (4 ) 

Interest rate contracts

      (47 )      19   
  

 

 

    

 

 

  

Total

    $ (34 )    $ 21   
  

 

 

    

 

 

  
Economic Hedging
  
Schedule of Effects of Derivative Instruments

Pre-tax gains / (losses) recorded in net earnings for economic hedges which are not designated as hedging instruments were:

 

                                                        
                 Location of
     For the Three Months Ended     Gain / (Loss)
     March 31,     Recognized
     2014     2013     in Earnings
     (in millions)      

Foreign exchange contracts:

       

Intercompany loans and forecasted interest payments

    $ (2 )    $ 20      Interest expense

Forecasted purchases

      (10 )      (12 )    Cost of sales

Forecasted transactions

      (5 )      –      Interest expense

Forecasted transactions

      (1 )      (1 )    Selling, general and

administrative

expenses

Interest rate contracts

      –        (2 )    Interest expense

Commodity contracts

      38        17      Cost of sales
  

 

 

    

 

 

    

Total

    $ 20      $ 22