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Financial Instruments (Tables)

9 Months Ended

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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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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