Hedging Transactions and Derivative Financial Instruments (Tables)
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3 Months Ended |
Apr. 01, 2016 |
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| Hedging Transactions and Derivative Financial Instruments |
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| Derivative instruments, fair value, designated as hedging instruments |
The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in millions):
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Fair Value1,2
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Derivatives Designated as Hedging Instruments |
Balance Sheet Location1
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April 1, 2016 |
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December 31, 2015 |
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Assets: |
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|
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Foreign currency contracts |
Prepaid expenses and other assets |
$ |
423 |
|
$ |
572 |
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Foreign currency contracts |
Other assets |
153 |
|
246 |
|
Commodity contracts |
Prepaid expenses and other assets |
1 |
|
1 |
|
Interest rate contracts |
Prepaid expenses and other assets |
15 |
|
20 |
|
Interest rate contracts |
Other assets |
203 |
|
62 |
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Total assets |
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$ |
795 |
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$ |
901 |
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Liabilities: |
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Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
297 |
|
$ |
51 |
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Foreign currency contracts |
Other liabilities |
82 |
|
75 |
|
Interest rate contracts |
Accounts payable and accrued expenses |
145 |
|
53 |
|
Interest rate contracts |
Other liabilities |
128 |
|
231 |
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Total liabilities |
|
$ |
652 |
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$ |
410 |
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1 All of the Company's derivative instruments are carried at fair value in our condensed consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 13 for the net presentation of the Company's derivative instruments.
2 Refer to Note 13 for additional information related to the estimated fair value.
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| Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] |
The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):
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Fair Value1,2
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Derivatives Not Designated as Hedging Instruments |
Balance Sheet Location1
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April 1, 2016 |
|
December 31, 2015 |
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Assets: |
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|
Foreign currency contracts |
Prepaid expenses and other assets |
$ |
254 |
|
$ |
105 |
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Foreign currency contracts |
Other assets |
10 |
|
241 |
|
Commodity contracts |
Prepaid expenses and other assets |
5 |
|
2 |
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Commodity contracts |
Other assets |
4 |
|
1 |
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Other derivative instruments |
Prepaid expenses and other assets |
38 |
|
17 |
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Other derivative instruments |
Other assets |
4 |
|
3 |
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Total assets |
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$ |
315 |
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$ |
369 |
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Liabilities: |
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Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
75 |
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$ |
59 |
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Foreign currency contracts |
Other liabilities |
7 |
|
9 |
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Commodity contracts |
Accounts payable and accrued expenses |
106 |
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154 |
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Commodity contracts |
Other liabilities |
4 |
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19 |
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Interest rate contracts |
Other liabilities |
1 |
|
1 |
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Other derivative instruments |
Accounts payable and accrued expenses |
2 |
|
5 |
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Other derivative instruments |
Other liabilities |
2 |
|
2 |
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Total liabilities |
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$ |
197 |
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$ |
249 |
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1 All of the Company's derivative instruments are carried at fair value in our condensed consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 13 for the net presentation of the Company's derivative instruments.
2 Refer to Note 13 for additional information related to the estimated fair value.
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| Derivative instruments, designated as hedging instruments, gain (loss) in statement of financial performance |
The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the three months ended April 1, 2016 (in millions):
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Gain (Loss) Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income1
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Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
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Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
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Foreign currency contracts |
$ |
(346 |
) |
Net operating revenues |
$ |
140 |
|
$ |
— |
|
1,2 |
Foreign currency contracts |
(24 |
) |
Cost of goods sold |
20 |
|
— |
|
1,2 |
Foreign currency contracts |
— |
|
Interest expense |
(2 |
) |
— |
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Foreign currency contracts |
42 |
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Other income (loss) — net |
43 |
|
— |
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Interest rate contracts |
(157 |
) |
Interest expense |
(2 |
) |
— |
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Total |
$ |
(485 |
) |
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$ |
199 |
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$ |
— |
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1 The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated statements of income.
2 Includes a de minimis amount of ineffectiveness in the hedging relationship.
The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the three months ended April 3, 2015 (in millions):
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Gain (Loss)
Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income1
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Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
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Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
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Foreign currency contracts |
$ |
764 |
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Net operating revenues |
$ |
120 |
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$ |
— |
|
1,2 |
Foreign currency contracts |
19 |
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Cost of goods sold |
12 |
|
— |
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Foreign currency contracts |
18 |
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Interest expense |
(2 |
) |
— |
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Interest rate contracts |
(132 |
) |
Interest expense |
(3 |
) |
— |
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|
Commodity contracts |
(1 |
) |
Cost of goods sold |
— |
|
— |
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Total |
$ |
668 |
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|
$ |
127 |
|
$ |
— |
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1 The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated statements of income.
2 Includes a de minimis amount of ineffectiveness in the hedging relationship.
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| Derivative instruments, fair value hedges, gain (loss) recognized in income |
The following table summarizes the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings during the three months ended April 1, 2016 and April 3, 2015 (in millions):
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Hedging Instruments and Hedged Items |
Location of Gain (Loss)
Recognized in Income
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Gain (Loss)
Recognized in Income1
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Three Months Ended |
April 1, 2016 |
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April 3, 2015 |
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Interest rate contracts |
Interest expense |
$ |
306 |
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$ |
29 |
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Fixed-rate debt |
Interest expense |
(277 |
) |
(19 |
) |
Net impact to interest expense |
|
$ |
29 |
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$ |
10 |
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Foreign currency contracts |
Other income (loss) — net |
$ |
51 |
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$ |
112 |
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Available-for-sale securities |
Other income (loss) — net |
(58 |
) |
(118 |
) |
Net impact to other income (loss) — net |
|
$ |
(7 |
) |
$ |
(6 |
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Net impact of fair value hedging instruments |
|
$ |
22 |
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$ |
4 |
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1 The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.
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| Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):
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Notional Amount |
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Gain (Loss) Recognized in OCI |
|
as of |
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Three Months Ended |
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April 1, 2016 |
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December 31, 2015 |
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|
April 1, 2016 |
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April 3, 2015 |
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Foreign currency denominated debt |
$ |
11,095 |
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$ |
10,912 |
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|
$ |
(521 |
) |
$ |
74 |
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Foreign currency contracts |
1,000 |
|
1,347 |
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|
(145 |
) |
424 |
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Total |
$ |
12,095 |
|
$ |
12,259 |
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|
$ |
(666 |
) |
$ |
498 |
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| Schedule of Derivative Instruments Not Designated as Hedging Instruments Gain (Loss) in Statement of Financial Performance [Table Text Block] |
The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):
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Three Months Ended |
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Derivatives Not Designated
as Hedging Instruments
|
Location of Gain (Loss)
Recognized in Income
|
April 1, 2016 |
|
April 3, 2015 |
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Foreign currency contracts |
Net operating revenues |
$ |
(25 |
) |
$ |
9 |
|
Foreign currency contracts |
Cost of goods sold |
(3 |
) |
— |
|
Foreign currency contracts |
Other income (loss) — net |
(62 |
) |
(17 |
) |
Commodity contracts |
Net operating revenues |
(1 |
) |
(3 |
) |
Commodity contracts |
Cost of goods sold |
23 |
|
(24 |
) |
Commodity contracts |
Selling, general and administrative expenses |
(2 |
) |
(5 |
) |
Other derivative instruments |
Selling, general and administrative expenses |
8 |
|
— |
|
Other derivative instruments |
Other income (loss) — net |
(10 |
) |
(68 |
) |
Total |
|
$ |
(72 |
) |
$ |
(108 |
) |
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