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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as of June 30, 2014 and December 31, 2013 as follows:


	June 30, 2014				December 31, 2013
	Asset		Liability		Asset		Liability
	Derivatives		Derivatives		Derivatives		Derivatives
	(in millions)

Derivatives designated as hedging instruments:
Currency exchange contracts	$	5	$	3	$	3	$	11
Commodity contracts		8		18		2		3
Interest rate contracts		98		–		209		–

	$	111	$	21	$	214	$	14

Derivatives not designated as hedging instruments:
Currency exchange contracts	$	29	$	56	$	84	$	8
Commodity contracts		94		68		60		51
Interest rate contracts		60		35		64		38

	$	183	$	159	$	208	$	97


Total fair value	$	294	$	180	$	422	$	111

Notional Values of Derivative Instruments

The net notional values of our derivative instruments as of June 30, 2014 and December 31, 2013 were:


	Notional Amount
	June 30,		December 31,
	2014		2013
	(in millions)

Currency exchange contracts:
Intercompany loans and forecasted interest payments	$	6,037	$	4,369
Forecasted transactions		7,533		2,565
Commodity contracts		802		805
Interest rate contracts		4,041		2,273
Net investment hedge – euro notes		4,450		4,466
Net investment hedge – pound sterling notes		1,112		1,076

Hedges of Net Investments in International Operations

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						For the Six Months Ended					Location of Gain / (Loss) Recognized in AOCI
	June 30,						June 30,
	2014			2013			2014			2013
	(in millions)

Euro notes	$	5		$	(10	)	$	–		$	10	Currency Translation
Pound sterling notes		(19	)		(1	)		(23	)		43	Adjustment

Derivative

Schedule of Derivative Instruments Fair Value and Measurement Inputs

The fair values (asset / (liability)) of our derivative instruments at June 30, 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)

Currency exchange contracts	$	(25	)	$	–	$	(25	)	$	–
Commodity contracts		16			1		15			–
Interest rate contracts		123			–		123			–

Total derivatives	$	114		$	1	$	113		$	–

The fair values (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)

Currency 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					For the Six Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
	(in millions)

Accumulated gain / (loss) at beginning of period	$	82		$	–	$	117		$	(38	)
Transfer of realized losses / (gains) in fair value to earnings		(2	)		15		(3	)		32
Unrealized gain / (loss) in fair value		(36	)		57		(70	)		78

Accumulated gain / (loss) at end of period	$	44		$	72	$	44		$	72

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						For the Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(in millions)

Currency exchange contracts – forecasted transactions	$	(2	)	$	(4	)	$	(4	)	$	(12	)
Commodity contracts		4			(10	)		9			(19	)
Interest rate contracts		–			(1	)		(2	)		(1	)

Total	$	2		$	(15	)	$	3		$	(32	)

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


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(in millions)

Currency exchange contracts – forecasted transactions	$	5		$	(2	)	$	7		$	4
Commodity contracts		(8	)		(4	)		3			(8	)
Interest rate contracts		(33	)		63			(80	)		82

Total	$	(36	)	$	57		$	(70	)	$	78

Fair Value Hedges

Schedule of Effects of Derivative Instruments

Fair Value Hedges:

Pre-tax gains / (losses) due to changes in fair value of our interest rate swaps and related hedged long-term debt were recorded in interest and other expense, net:


	For the Three and Six Months Ended June 30,
	2014			2013
	(in millions)

Derivatives	$	14		$	–
Borrowings		(14	)		–

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						For the Six Months Ended						Gain / (Loss)
	June 30,						June 30,						Recognized
	2014			2013			2014			2013			in Earnings
	(in millions)

Currency exchange contracts:
Intercompany loans and forecasted interest payments	$	3		$	(17	)	$	1		$	3		Interest expense
Forecasted purchases		(30	)		38			(40	)		26		Cost of sales
Forecasted transactions		(9	)		–			(14	)		–		Interest expense
Forecasted transactions		(2	)		4			(3	)		3		Selling, general and administrative expenses
Interest rate contracts		1			–			1			(2	)	Interest expense
Commodity contracts		32			17			70			34		Cost of sales

Total	$	(5	)	$	42		$	15		$	64

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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