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Financial Instruments (Tables)

6 Months Ended

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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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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