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Financial Instruments (Tables) | 9 Months Ended
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Sep. 30, 2017
Derivatives |
Fair Value of Derivatives Instruments | Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows:
|  | As of September 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 |  |  | $ | 19 |  |  | $ | 8 |
Commodity contracts |  |  | 1 |  |  |  | – |  |  |  | 17 |  |  |  | 22 |
Interest rate contracts |  |  | 33 |  |  |  | 421 |  |  |  | 108 |  |  |  | 19 |
|  | $ | 34 |  |  | $ | 423 |  |  | $ | 144 |  |  | $ | 49 |
Derivatives not designated as accounting hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts |  | $ | 70 |  |  | $ | 45 |  |  | $ | 29 |  |  | $ | 43 |
Commodity contracts |  |  | 35 |  |  |  | 169 |  |  |  | 112 |  |  |  | 167 |
Interest rate contracts |  |  | 15 |  |  |  | 10 |  |  |  | 27 |  |  |  | 19 |
|  | $ | 120 |  |  | $ | 224 |  |  | $ | 168 |  |  | $ | 229 |
Total fair value |  | $ | 154 |  |  | $ | 647 |  |  | $ | 312 |  |  | $ | 278 |
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, 2017 |
|  | 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 |  | $ | 23 |  |  | $ | – |  |  | $ | 23 |  |  | $ | – |
Commodity contracts |  |  | (133 | ) |  |  | (133 | ) |  |  | – |  |  |  | – |
Interest rate contracts |  |  | (383 | ) |  |  | – |  |  |  | (383 | ) |  |  | – |
Total derivatives |  | $ | (493 | ) |  | $ | (133 | ) |  | $ | (360 | ) |  | $ | – |
|  | As of December 31, 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 |  | $ | (3 | ) |  | $ | – |  |  | $ | (3 | ) |  | $ | – |
Commodity contracts |  |  | (60 | ) |  |  | (86 | ) |  |  | 26 |  |  |  | – |
Interest rate contracts |  |  | 97 |  |  |  | – |  |  |  | 97 |  |  |  | – |
Total derivatives |  | $ | 34 |  |  | $ | (86 | ) |  | $ | 120 |  |  | $ | – |
Notional Values of Derivative Instruments | The net notional values of our derivative instruments were:
|  | Notional Amount |
|  | As of September 30, 2017 |  |  | As of December 31, 2016 |
|  | (in millions) |
Currency exchange contracts: |  |  |  |  |  |  |  |
Intercompany loans and forecasted interest payments |  | $ | 3,649 |  |  | $ | 3,343 |
Forecasted transactions |  |  | 2,066 |  |  |  | 1,452 |
Commodity contracts |  |  | 1,137 |  |  |  | 837 |
Interest rate contracts |  |  | 6,517 |  |  |  | 6,365 |
Net investment hedge – euro notes |  |  | 3,975 |  |  |  | 4,012 |
Net investment hedge – pound sterling notes |  |  | 454 |  |  |  | 419 |
Net investment hedge – Swiss franc notes |  |  | 1,704 |  |  |  | 1,447 |
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 September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Accumulated (loss)/gain at beginning of period |  | $ | (91 | ) |  | $ | (36 | ) |  | $ | (121 | ) |  | $ | (45 | )
Transfer of realized (gains)/losses in fair value to earnings |  |  | (13 | ) |  |  | (2 | ) |  |  | (10 | ) |  |  | 64 |
Unrealized gain/(loss) in fair value |  |  | (6 | ) |  |  | 4 |  |  |  | 21 |  |  |  | (53 | )
Accumulated (loss)/gain at end of period |  | $ | (110 | ) |  | $ | (34 | ) |  | $ | (110 | ) |  | $ | (34 | )
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, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Currency exchange contracts – forecasted transactions |  | $ | (3 | ) |  | $ | (6 | ) |  | $ | (2 | ) |  | $ | (3 | )
Commodity contracts |  |  | 16 |  |  |  | 8 |  |  |  | 12 |  |  |  | (1 | )
Interest rate contracts |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (60 | )
Total |  | $ | 13 |  |  | $ | 2 |  |  | $ | 10 |  |  | $ | (64 | )
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, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | (in millions) |
Currency exchange contracts – forecasted transactions |  | $ | (11 | ) |  | $ | (11 | ) |  | $ | (37 | ) |  | $ | (21 | )
Commodity contracts |  |  | 25 |  |  |  | 10 |  |  |  | 31 |  |  |  | 19 |
Interest rate contracts |  |  | (20 | ) |  |  | 5 |  |  |  | 27 |  |  |  | (51 | )
Total |  | $ | (6 | ) |  | $ | 4 |  |  | $ | 21 |  |  | $ | (53 | )
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 September 30, |  |  | For the Nine Months Ended September 30, |  |  |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |
Derivatives |  | $ | (2 | ) |  | $ | (11 | ) |  | $ | (4 | ) |  | $ | (2 | ) |
Borrowings |  |  | 2 |  |  |  | 11 |  |  |  | 4 |  |  |  | 2 |  |
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
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |  |
Currency exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Intercompany loans and forecasted interest payments |  | $ | (13 | ) |  | $ | 7 |  |  | $ | (8 | ) |  | $ | 18 |  |  | Interest and other expense, net
Forecasted transactions |  |  | (1 | ) |  |  | (14 | ) |  |  | – |  |  |  | (91 | ) |  | Cost of sales
Forecasted transactions |  |  | 1 |  |  |  | 2 |  |  |  | (1 | ) |  |  | 10 |  |  | Interest and other expense, net
Forecasted transactions |  |  | – |  |  |  | 4 |  |  |  | 2 |  |  |  | 16 |  |  | Selling, general and administrative expenses
Commodity contracts |  |  | (17 | ) |  |  | (13 | ) |  |  | (176 | ) |  |  | (26 | ) |  | Cost of sales
Total |  | $ | (30 | ) |  | $ | (14 | ) |  | $ | (183 | ) |  | $ | (73 | ) |  |
Net investment hedge |
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
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |
|  | (in millions) |  |  |
Euro notes |  | $ | (83 | ) |  | $ | (38 | ) |  | $ | (279 | ) |  | $ | (110 | ) |  | Currency
Pound sterling notes |  |  | (8 | ) |  |  | 21 |  |  |  | (23 | ) |  |  | 107 |  |  | Translation
Swiss franc notes |  |  | 12 |  |  |  | (4 | ) |  |  | (53 | ) |  |  | (33 | ) |  | Adjustment

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