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Financial Instruments (Tables) | 6 Months Ended
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Jun. 30, 2017
Fair Value of Derivatives Instruments | Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows:
|  | As of June 30, 2017 |  |  | As of December 31, 2016 |
|  | Asset |  |  | Liability |  |  | Asset |  |  | Liability |
|  | Derivatives |  |  | Derivatives |  |  | Derivatives |  |  | Derivatives |
|  | (in millions) |
Derivatives designated as accounting hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts |  | $ | 2 |  |  | $ | 1 |  |  | $ | 19 |  |  | $ | 8 |
Commodity contracts |  |  | 1 |  |  |  | 9 |  |  |  | 17 |  |  |  | 22 |
Interest rate contracts |  |  | 22 |  |  |  | 246 |  |  |  | 108 |  |  |  | 19 |
|  | $ | 25 |  |  | $ | 256 |  |  | $ | 144 |  |  | $ | 49 |
Derivatives not designated as accounting hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts |  | $ | 51 |  |  | $ | 49 |  |  | $ | 29 |  |  | $ | 43 |
Commodity contracts |  |  | 57 |  |  |  | 234 |  |  |  | 112 |  |  |  | 167 |
Interest rate contracts |  |  | 22 |  |  |  | 15 |  |  |  | 27 |  |  |  | 19 |
|  | $ | 130 |  |  | $ | 298 |  |  | $ | 168 |  |  | $ | 229 |
Total fair value |  | $ | 155 |  |  | $ | 554 |  |  | $ | 312 |  |  | $ | 278 |
Notional Values of Derivative Instruments | The net notional values of our derivative instruments were:
|  | Notional Amount |
|  | As of June 30, |  |  | As of December 31, |
|  | 2017 |  |  | 2016 |
|  | (in millions) |
Currency exchange contracts: |  |  |  |  |  |  |  |
Intercompany loans and forecasted interest payments |  | $ | 2,992 |  |  | $ | 3,343 |
Forecasted transactions |  |  | 1,432 |  |  |  | 1,452 |
Commodity contracts |  |  | 1,174 |  |  |  | 837 |
Interest rate contracts |  |  | 6,480 |  |  |  | 6,365 |
Net investment hedge – euro notes |  |  | 3,844 |  |  |  | 4,012 |
Net investment hedge – pound sterling notes |  |  | 442 |  |  |  | 419 |
Net investment hedge – Swiss franc notes |  |  | 1,723 |  |  |  | 1,447 |
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 June 30, |  |  | For the Six Months Ended June 30, |  |  | Location of Gain/(Loss) Recognized in AOCI
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |  |
Euro notes |  | $ | (168 | ) |  | $ | 82 |  |  | $ | (196 | ) |  | $ | (72 | ) |  | Currency
Pound sterling notes |  |  | (10 | ) |  |  | 63 |  |  |  | (15 | ) |  |  | 86 |  |  | Translation
Swiss franc notes |  |  | (49 | ) |  |  | 14 |  |  |  | (64 | ) |  |  | (29 | ) |  | 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, 2017 |
|  |  |  |  | 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 |  | $ | 3 |  |  | $ | – |  |  | $ | 3 |  |  | $ | – |
Commodity contracts |  |  | (185 | ) |  |  | (175 | ) |  |  | (10 | ) |  |  | – |
Interest rate contracts |  |  | (217 | ) |  |  | – |  |  |  | (217 | ) |  |  | – |
Total derivatives |  | $ | (399 | ) |  | $ | (175 | ) |  | $ | (224 | ) |  | $ | – |
|  | As of December 31, 2016 |
|  |  |  |  | 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 |  | $ | (3 | ) |  | $ | – |  |  | $ | (3 | ) |  | $ | – |
Commodity contracts |  |  | (60 | ) |  |  | (86 | ) |  |  | 26 |  |  |  | – |
Interest rate contracts |  |  | 97 |  |  |  | – |  |  |  | 97 |  |  |  | – |
Total derivatives |  | $ | 34 |  |  | $ | (86 | ) |  | $ | 120 |  |  | $ | – |
Cash Flow Hedges |
Schedule of Cash Flow Hedges Effect on Accumulated Other Comprehensive Earnings/(Losses), 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, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Accumulated (loss)/gain at January 1 |  | $ | (103 | ) |  | $ | (53 | ) |  | $ | (121 | ) |  | $ | (45 | )
Transfer of realized (gains)/losses in fair value to earnings |  |  | (4 | ) |  |  | 8 |  |  |  | 3 |  |  |  | 66 |
Unrealized gain/(loss) in fair value |  |  | 16 |  |  |  | 9 |  |  |  | 27 |  |  |  | (57 | )
Accumulated (loss)/gain at June 30 |  | $ | (91 | ) |  | $ | (36 | ) |  | $ | (91 | ) |  | $ | (36 | )
Schedule of Effects of Derivative Instruments |
|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Accumulated (loss)/gain at January 1 |  | $ | (103 | ) |  | $ | (53 | ) |  | $ | (121 | ) |  | $ | (45 | )
Transfer of realized (gains)/losses in fair value to earnings |  |  | (4 | ) |  |  | 8 |  |  |  | 3 |  |  |  | 66 |
Unrealized gain/(loss) in fair value |  |  | 16 |  |  |  | 9 |  |  |  | 27 |  |  |  | (57 | )
Accumulated (loss)/gain at June 30 |  | $ | (91 | ) |  | $ | (36 | ) |  | $ | (91 | ) |  | $ | (36 | )
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, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Currency exchange contracts – forecasted transactions |  | $ | 1 |  |  | $ | (2 | ) |  | $ | 1 |  |  | $ | 3 |
Commodity contracts |  |  | 3 |  |  |  | (6 | ) |  |  | (4 | ) |  |  | (9 | )
Interest rate contracts |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (60 | )
Total |  | $ | 4 |  |  | $ | (8 | ) |  | $ | (3 | ) |  | $ | (66 | )
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, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Currency exchange contracts – forecasted transactions |  | $ | (14 | ) |  | $ | 2 |  |  | $ | (26 | ) |  | $ | (10 | )
Commodity contracts |  |  | 6 |  |  |  | 14 |  |  |  | 6 |  |  |  | 9 |
Interest rate contracts |  |  | 24 |  |  |  | (7 | ) |  |  | 47 |  |  |  | (56 | )
Total |  | $ | 16 |  |  | $ | 9 |  |  | $ | 27 |  |  | $ | (57 | )
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 June 30, |  |  | For the Six Months Ended June 30, |  |  |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |
Derivatives |  | $ | 1 |  |  | $ | 4 |  |  | $ | (2 | ) |  | $ | 9 |  |
Borrowings |  |  | (1 | ) |  |  | (4 | ) |  |  | 2 |  |  |  | (9 | ) |
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
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |  |
Currency exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Intercompany loans and forecasted interest payments |  | $ | 3 |  |  | $ | 6 |  |  | $ | 5 |  |  | $ | 11 |  |  | Interest and other expense, net
Forecasted transactions |  |  | 18 |  |  |  | (46 | ) |  |  | 2 |  |  |  | (77 | ) |  | Cost of sales
Forecasted transactions |  |  | 1 |  |  |  | – |  |  |  | (2 | ) |  |  | 8 |  |  | Interest and other expense, net
Forecasted transactions |  |  | 2 |  |  |  | 8 |  |  |  | 2 |  |  |  | 12 |  |  | Selling, general and administrative expenses
Commodity contracts |  |  | (97 | ) |  |  | 31 |  |  |  | (160 | ) |  |  | (13 | ) |  | Cost of sales
Total |  | $ | (73 | ) |  | $ | (1 | ) |  | $ | (153 | ) |  | $ | (59 | ) |  |

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