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Financial Instruments | 9 Months Ended
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Sep. 30, 2016
Financial Instruments Disclosure [Abstract] |
Financial Instruments | Financial Instruments Cash, Cash Equivalents and Marketable Securities The company's cash, cash equivalents and marketable securities as of September 30, 2016 and December 31, 2015 are comprised of the following:
| September 30, 2016 | December 31, 2015
| Cash and Cash Equivalents | Marketable Securities | Total Estimated Fair Value | Cash and Cash Equivalents | Marketable Securities | Total Estimated Fair Value
Cash | $ | 1,839 |  | $ | — |  | $ | 1,839 |  | $ | 1,938 |  | $ | — |  | $ | 1,938 |
Level 1: |  |  |  |  |  |
Money market funds | — |  | — |  | — |  | 550 |  | — |  | 550 |
U.S. Treasury securities 1 | — |  | 161 |  | 161 |  | — |  | 788 |  | 788 |
Level 2: |  |  |  |  |  |
Certificate of deposit / time deposits 2 | 2,613 |  | 919 |  | 3,532 |  | 2,812 |  | 118 |  | 2,930 |
Total cash, cash equivalents and marketable securities | $ | 4,452 |  | $ | 1,080 |  |  | $ | 5,300 |  | $ | 906 |  |
1. | Available-for-sale securities are reported at estimated fair value with unrealized gains and losses reported as component of accumulated other comprehensive loss. Proceeds from the sale of available-for-sale securities were $161 and $626 in the three and nine months ended September 30, 2016, respectively.
2. | Held-to-maturity investments are reported at amortized cost.
The estimated fair value of the company's cash equivalents, which approximates carrying value as of September 30, 2016 and December 31, 2015, was determined using level 1 and level 2 inputs within the fair value hierarchy. Level 1 measurements were based on observed net asset values and level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity. The estimated fair value of the held-to-maturity securities, which approximates carrying value as of September 30, 2016 and December 31, 2015, was determined using level 2 inputs within the fair value hierarchy, as described below. Level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity. The carrying value approximates fair value due to the short-term nature of the investments. The estimated fair value of the available-for-sale securities as of September 30, 2016 and December 31, 2015 was determined using level 1 inputs within the fair value hierarchy. Level 1 measurements were based on quoted market prices in active markets for identical assets and liabilities. The available-for-sale securities as of September 30, 2016 and December 31, 2015 are held by certain foreign subsidiaries in which the USD is not the functional currency. The fluctuations in foreign exchange are recorded in accumulated other comprehensive loss. These fluctuations are subsequently reclassified from accumulated other comprehensive loss to earnings in the period in which the available-for-sale securities are sold and the gains and losses on these securities offset a portion of the foreign exchange fluctuations in earnings for the company. Debt The estimated fair value of the company's total debt, including interest rate financial instruments, was determined using level 2 inputs within the fair value hierarchy, as described in the company's 2015 Annual Report in Note 1, “Summary of Significant Accounting Policies.” Based on quoted market prices for the same or similar issues or on current rates offered to the company for debt of the same remaining maturities, the fair value of the company's debt was approximately $12,040 and $9,050 as of September 30, 2016 and December 31, 2015, respe ctively. Derivative Instruments Objectives and Strategies for Holding Derivative Instruments In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk. Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps. The company has not designated any non derivatives as hedging instruments. The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties to limit its exposure to credit losses. The company's derivative assets and liabilities are reported on a gross basis in the Condensed Consolidated Balance Sheets. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management. The notional amounts of the company's derivative instruments were as follows:
| September 30, 2016 | December 31, 2015
Derivatives designated as hedging instruments: |  |
Foreign currency contracts | $ | — |  | $ | 10 |
Commodity contracts | 26 |  | 356 |
Derivatives not designated as hedging instruments: |  |
Foreign currency contracts | 7,758 |  | 8,065 |
Commodity contracts | 13 |  | 70 |
Foreign Currency Risk The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments and cash flows. The company routinely uses foreign currency exchange contracts, including forward exchange and option contracts, to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities of its operations. The primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, net of related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates. Commodity Price Risk Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn, soybeans and soybean meal. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with agricultural commodity exposures. Cash Flow Hedges Foreign Currency Contracts The company uses foreign currency exchange instruments such as forwards and options to offset a portion of the company's exposure to certain foreign currency denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency denominated revenues. In addition, the company occasionally uses forward foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated transactions such as capital expenditures. Commodity Contracts The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures and swaps, to hedge the commodity price risk associated with agriculture commodity exposures. While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring. The following table summarizes the after-tax effect of cash flow hedges on accumulated other comprehensive loss for the three and nine months ended September 30, 2016 and 2015:
| Three Months Ended | Nine Months Ended
| September 30, | September 30,
| 2016 | 2015 | 2016 | 2015
Beginning balance | $ | 10 |  | $ | (10 | ) | $ | (24 | ) | $ | (6 | )
Additions and revaluations of derivatives designated as cash flow hedges | (2 | ) | (13 | ) | 21 |  | (24 | )
Clearance of hedge results to earnings | — |  | — |  | 11 |  | 7 |
Ending balance | $ | 8 |  | $ | (23 | ) | $ | 8 |  | $ | (23 | )
At September 30, 2016, an after-tax net gain of $7 is expected to be reclassified from accumulated other comprehensive loss into earnings over the next 12 months. Derivatives not Designated in Hedging Relationships Foreign Currency Contracts The company routinely uses foreign currency exchange contracts, including forward exchange and options contracts, to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The company also uses foreign currency exchange contracts, including forward exchange and options contracts, to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. Commodity Contracts The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn, soybeans and soybean meal. Fair Values of Derivative Instruments The table below presents the fair values of the company's derivative assets and liabilities within the fair value hierarchy, as described in the company's 2015 Annual Report in Note 1, “Summary of Significant Accounting Policies.”
|  | Fair Value Using Level 2 Inputs
| Balance Sheet Location | September 30, 2016 | December 31, 2015
Asset derivatives: |  |  |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign currency contracts | Accounts and notes receivable, net | $ | 31 |  | $ | 74 |
Total asset derivatives 1 |  | $ | 31 |  | $ | 74 |
Cash collateral | Other accrued liabilities | $ | 2 |  | $ | 7 |
Liability derivatives: |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | Other accrued liabilities | $ | 80 |  | $ | 80 |
Commodity contracts | Other accrued liabilities | — |  | 4 |
Total liability derivatives 1 |  | $ | 80 |  | $ | 84 |
1. | The company's derivative assets and liabilities subject to enforceable master netting arrangements totaled $25 at September 30, 2016 and $35 at December 31, 2015.
Effect of Derivative Instruments
| Amount of Gain (Loss) Recognized in OCI 1 (Effective Portion) | Amount of Gain (Loss) Recognized in Income 2 |
Three Months Ended September 30, | 2016 | 2015 | 2016 | 2015 | Income Statement Classification
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow hedges: |  |  |  |  |
Commodity contracts | $ | (3 | ) | $ | (22 | ) | $ | — |  | $ | — |  | Cost of goods sold
| (3 | ) | (22 | ) | — |  | — |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | — |  | — |  | (82 | ) | 174 |  | Other (loss) income, net 3
Commodity contracts | — |  | — |  | (1 | ) | (2 | ) | Cost of goods sold
| — |  | — |  | (83 | ) | 172 |  |
Total derivatives | $ | (3 | ) | $ | (22 | ) | $ | (83 | ) | $ | 172 |  |
| Amount of Gain (Loss) Recognized in OCI 1 (Effective Portion) | Amount of Gain (Loss) Recognized in Income 2 |
Nine Months Ended September 30, | 2016 | 2015 | 2016 | 2015 | Income Statement Classification
Derivatives designated as hedging instruments: |  |  |  |  |
Fair value hedges: |  |  |  |  |
Interest rate swaps | $ | — |  | $ | — |  | $ | — |  | $ | (1 | ) | Interest expense
Cash flow hedges: |  |  |  |  |
Foreign currency contracts | — |  | (1 | ) | — |  | 10 |  | Net sales
Commodity contracts | 34 |  | (35 | ) | (18 | ) | (22 | ) | Cost of goods sold
| 34 |  | (36 | ) | (18 | ) | (13 | ) |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | — |  | — |  | (397 | ) | 435 |  | Other (loss) income, net 3
Foreign currency contracts | — |  | — |  | (15 | ) | (3 | ) | Net sales
Commodity contracts | — |  | — |  | (11 | ) | 3 |  | Cost of goods sold
| — |  | — |  | (423 | ) | 435 |  |
Total derivatives | $ | 34 |  | $ | (36 | ) | $ | (441 | ) | $ | 422 |  |
1. | OCI is defined as other comprehensive income (loss).
2. | For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from accumulated OCI into income during the period. For the three and nine months ended September 30, 2016 and 2015, there was no material ineffectiveness with regard to the company's cash flow hedges.
3. | Gain (loss) recognized in other (loss) income, net, was partially offset by the related gain (loss) on the foreign currency-denominated monetary assets and liabilities of the company's operations, which were $6 and $(210) for the three months ended September 30, 2016 and 2015, respectively, and $185 and $(381) for the nine months ended September 30, 2016 and 2015, respectively. See Note 5 for additional information.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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