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Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2015
Fair Value of Derivatives Instruments

Derivative instruments were recorded at fair value in the consolidated balance sheets as follows:

 

                                                                           
     As of September 30, 2015      As of December 31, 2014  
     Asset      Liability      Asset      Liability  
     Derivatives      Derivatives      Derivatives      Derivatives  
     (in millions)  

Derivatives designated as
accounting hedges:

            

Currency exchange contracts

    $ 23       $ 4       $ 69       $ 17   

Commodity contracts

      12         25         12         33   

Interest rate contracts

      22         69         13         42   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 57       $ 98       $ 94       $ 92   
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivatives not designated as
accounting hedges:

            

Currency exchange contracts

    $ 61       $ 23       $ 735       $ 24   

Commodity contracts

      80         98         90         194   

Interest rate contracts

      44         29         59         39   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 185       $ 150       $ 884       $ 257   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fair value

    $ 242       $ 248       $ 978       $ 349   
  

 

 

     

 

 

     

 

 

     

 

 

  
Notional Values of Derivative Instruments

The net notional values of our derivative instruments were:

 

                                     
     Notional Amount  
     As of September 30,        As of December 31,  
     2015        2014  
     (in millions)  

Currency exchange contracts:

        

Intercompany loans and forecasted interest payments

    $ 3,657         $ 3,640   

Forecasted transactions

      1,660           6,681   

Commodity contracts

      617           1,569   

Interest rate contracts

      3,051           3,970   

Net investment hedge – euro notes

      4,471           3,932   

Net investment hedge – pound sterling notes

      1,210           545   

Net investment hedge – Swiss franc notes

      694           –   
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, pound sterling and Swiss franc-denominated debt were:

 

                                                                                              
     For the Three Months Ended
September 30,		      For the Nine Months Ended
September 30,		      Location of
Gain / (Loss)
Recognized in
AOCI
     2015      2014      2015      2014     
     (in millions)       

Euro notes

    $ (8 )     $ 219       $ 188       $ 219       Currency

Pound sterling notes

      30         37         17         14       Translation

Swiss franc notes

      18         –         (13 )       –       Adjustment
Derivative  
Schedule of Derivative Instruments Fair Value and Measurement Inputs

The fair values (asset / (liability)) of our derivative instruments were determined using:

 

                                                                           
     As of September 30, 2015  
     Total
Fair Value of Net
Asset / (Liability)		      Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		      Significant
Other Observable
Inputs (Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  
     (in millions)  

Currency exchange contracts

    $ 57       $ –       $ 57       $ –   

Commodity contracts

      (31 )       (7 )       (24 )       –   

Interest rate contracts

      (32 )       –         (32 )       –   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivatives

    $ (6 )     $ (7 )     $ 1       $ –   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

                                                                           
     As of December 31, 2014  
     Total
Fair Value of Net
Asset / (Liability)		      Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		      Significant
Other Observable
Inputs (Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  
     (in millions)  

Currency exchange contracts

    $ 763       $ –       $ 763       $ –   

Commodity contracts

      (125 )       (49 )       (76 )       –   

Interest rate contracts

      (9 )       –         (9 )       –   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivatives

    $ 629       $ (49 )     $ 678       $ –   
  

 

 

     

 

 

     

 

 

     

 

 

  
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
September 30,		      For the Nine Months Ended
September 30,		  
     2015      2014      2015      2014  
     (in millions)  

Accumulated gain / (loss) at beginning of period

    $ (53 )     $ 44       $ (2 )     $ 117   

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

      60         (17 )       6         (20 ) 

Unrealized gain / (loss) in fair value

      (69 )       47         (66 )       (23 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Accumulated gain / (loss) at end of period

    $ (62 )     $ 74       $ (62 )     $ 74   
  

 

 

     

 

 

     

 

 

     

 

 

  
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
September 30,		      For the Nine Months Ended
September 30,		  
   2015      2014      2015      2014  
     (in millions)  

Currency exchange contracts –
forecasted transactions

    $ (11 )     $ 12       $ 73       $ 8   

Commodity contracts

      (49 )       5         (53 )       14   

Interest rate contracts

      –         –         (26 )       (2 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ (60 )     $ 17       $ (6 )     $ 20   
  

 

 

     

 

 

     

 

 

     

 

 

  

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

 

     For the Three Months Ended
September 30,		      For the Nine Months Ended
September 30,		  
   2015      2014      2015      2014  
     (in millions)  

Currency exchange contracts –
forecasted transactions

    $ 8       $ 58       $ 33       $ 65   

Commodity contracts

      (38 )       7         (61 )       10   

Interest rate contracts

      (39 )       (18 )       (38 )       (98 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ (69 )     $ 47       $ (66 )     $ (23 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Fair Value Hedges  
Schedule of Effects of Derivative Instruments

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 / (income):

 

                                                                           
     For the Three Months Ended
September 30,		      For the Nine Months Ended
September 30,		  
     2015      2014      2015      2014  
     (in millions)  

Derivatives

    $ 4       $ (13 )     $ 8       $ 1   

Borrowings

      (4 )       13         (8 )       (1 ) 
Economic Hedging  
Schedule of Effects of Derivative Instruments

Pre-tax gains / (losses) recorded in net earnings for economic hedges were:

 


     For the Three Months Ended
September 30,		      For the Nine Months Ended
September 30,		     

Location of

Gain / (Loss)

Recognized

in Earnings
     2015      2014      2015      2014     
     (in millions)       

Currency exchange contracts:

               

Intercompany loans and forecasted interest payments

    $ 8       $ 4       $ 22       $ 5      

Interest and other

expense / (income)

Forecasted transactions

      43         29         33         (11 )     Cost of sales

Forecasted transactions

      36         419         437         405       Interest and other expense / (income)

Forecasted transactions

      5         (4 )       (11 )       (7 )    

Selling, general and

administrative expenses

Interest rate contracts

      –         (1 )       –         –       Interest and other expense / (income)

Commodity contracts

      (99 )       (36 )       (158 )       (4 )     Cost of sales
  

 

 

     

 

 

     

 

 

     

 

 

     

Total

    $ (7 )     $ 411       $ 323       $ 388