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Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2016
Fair Value of Derivatives Instruments

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

 

                                                                           
     As of June 30, 2016      As of December 31, 2015  
     Asset      Liability      Asset      Liability  
     Derivatives      Derivatives      Derivatives      Derivatives  
     (in millions)  

Derivatives designated as
accounting hedges:

            

Currency exchange contracts

    $ 8       $ 7       $ 20       $ 7   

Commodity contracts

      26         5         37         35   

Interest rate contracts

      20         8         12         57   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 54       $ 20       $ 69       $ 99   
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivatives not designated as
accounting hedges:

            

Currency exchange contracts

    $ 32       $ 89       $ 61       $ 33   

Commodity contracts

      75         45         70         56   

Interest rate contracts

      37         26         43         28   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 144       $ 160       $ 174       $ 117   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fair value

    $ 198       $ 180       $ 243       $ 216   
  

 

 

     

 

 

     

 

 

     

 

 

  
Notional Values of Derivative Instruments

The net notional values of our derivative instruments were:

 

                                                               
     Notional Amount  
     As of June 30,        As of December 31,  
     2016        2015  
     (in millions)  

Currency exchange contracts:

        

Intercompany loans and forecasted interest payments

    $ 4,155         $ 4,148   

Forecasted transactions

      1,491           1,094   

Commodity contracts

      747           732   

Interest rate contracts

      2,066           3,033   

Net investment hedge – euro notes

      5,220           4,345   

Net investment hedge – pound sterling notes

      1,268           1,404   

Net investment hedge – Swiss franc notes

      1,511           1,073   
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:

 

                                                           
                                     Location of
Gain / (Loss)
       For the Three Months Ended June 30,      For the Six Months Ended June 30,      Recognized in
AOCI
       2016        2015      2016      2015     
      

(in millions)

 

       

Euro notes

      $ 82         $ (118 )     $ (72 )     $ 196       Currency

Pound sterling notes

        63           (45 )       86         (13 )     Translation

Swiss franc notes

        14           (17 )       (29 )       (30 )     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 June 30, 2016  
     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

    $ (56 )     $ –       $ (56 )     $ –   

Commodity contracts

      51         29         22         –   

Interest rate contracts

      23         –         23         –   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivatives

    $ 18       $ 29       $ (11 )     $ –   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

                                                                           
     As of December 31, 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

    $ 41       $ –       $ 41       $ –   

Commodity contracts

      16         29         (13 )       –   

Interest rate contracts

      (30 )       –         (30 )       –   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivatives

    $ 27       $ 29       $ (2 )     $ –   
  

 

 

     

 

 

     

 

 

     

 

 

  
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
June 30,		      For the Six Months Ended
June 30,		  
     2016      2015      2016      2015  
     (in millions)  

Accumulated gain / (loss) at beginning of period

    $ (53 )     $ (46 )     $ (45 )     $ (2 ) 

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

      8         (36 )       66         (54 ) 

Unrealized gain / (loss) in fair value

      9         29         (57 )       3   
  

 

 

     

 

 

     

 

 

     

 

 

  

Accumulated gain / (loss) at end of period

    $ (36 )     $ (53 )     $ (36 )     $ (53 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
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
June 30,		      For the Six Months Ended
June 30,		  
     2016      2015      2016      2015  
     (in millions)  

Currency exchange contracts – forecasted transactions

    $ (2 )     $ 38       $ 3       $ 84   

Commodity contracts

      (6 )       (2 )       (9 )       (4 ) 

Interest rate contracts

      –         –         (60 )       (26 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ (8 )     $ 36       $ (66 )     $ 54   
  

 

 

     

 

 

     

 

 

     

 

 

  

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

 

                                                                           
     For the Three Months Ended
June 30,		      For the Six Months Ended
June 30,		  
     2016      2015      2016      2015  
     (in millions)  

Currency exchange contracts – forecasted transactions

    $ 2       $ (24 )     $ (10 )     $ 25   

Commodity contracts

      14         15         9         (23 ) 

Interest rate contracts

      (7 )       38         (56 )       1   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 9       $ 29       $ (57 )     $ 3   
  

 

 

     

 

 

     

 

 

     

 

 

  
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, net:

 

                                                                                              
    For the Three Months Ended     For the Six Months Ended        
    June 30,     June 30,        
    2016     2015     2016     2015        
   

(in millions)

 

        

Derivatives

   $ 4      $ –      $ 9      $ 4     

Borrowings

     (4 )      –        (9 )      (4 )   
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 June 30,     For the Six Months Ended June 30,     Location of
Gain / (Loss)
Recognized
in Earnings		  
    2016     2015     2016     2015    
    (in millions)        

Currency exchange contracts:

          

Intercompany loans and forecasted interest payments

   $ 6      $ 7      $ 11      $ 14       
 		 Interest and other
expense, net		   
  

Forecasted transactions

     (46 )      (7 )      (77 )      (10 )      Cost of sales   

Forecasted transactions

     –        (152 )      8        401       
 		 Interest and other
expense, net		   
  

Forecasted transactions

     8        (5 )      12        (16 )     
 
 		 Selling, general and
administrative
expenses		   
  
  

Interest rate contracts

     –        (1 )      –        –       
 		 Interest and other
expense, net		   
  

Commodity contracts

     31        (18 )      (13 )      (59 )      Cost of sales   
 

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ (1 )    $ (176 )    $ (59 )    $ 330