Current report filing

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v3.5.0.2
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
12 Months Ended
Dec. 31, 2015
Hedging Transactions and Derivative Financial Instruments Disclosures [Abstract]  
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):
 
 
 
Fair Value1,2
Derivatives Designated as Hedging Instruments
Balance Sheet Location1
 
December 31,
2015

 
December 31,
2014

Assets:
 
 
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
 
$
572

 
$
923

Foreign currency contracts
Other assets
 
246

 
346

Commodity contracts
Prepaid expenses and other assets
 
1

 

Interest rate contracts
Prepaid expenses and other assets
 
20

 
14

Interest rate contracts
Other assets
 
62

 
146

Total assets
 
 
$
901

 
$
1,429

Liabilities:
 
 
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
 
$
51

 
$
24

Foreign currency contracts
Other liabilities
 
75

 
249

Commodity contracts
Accounts payable and accrued expenses
 

 
1

Interest rate contracts
Accounts payable and accrued expenses
 
53

 
11

Interest rate contracts
Other liabilities
 
231

 
35

Total liabilities
 
 
$
410

 
$
320

1 
All of the Company's derivative instruments are carried at fair value in our 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 16 for the net presentation of the Company's derivative instruments.
2 
Refer to Note 16 for additional information related to the estimated fair value.
Derivative instruments, fair value, not designated as hedging instruments
The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):
 
 
 
Fair Value1,2
Derivatives Not Designated as Hedging Instruments
Balance Sheet Location1
 
December 31,
2015

 
December 31,
2014

Assets:
 
 
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
 
$
105

 
$
44

Foreign currency contracts
Other assets
 
241

 
231

Commodity contracts
Prepaid expenses and other assets
 
2

 
9

Commodity contracts
Other assets
 
1

 
1

Other derivative instruments
Prepaid expenses and other assets
 
17

 
14

Other derivative instruments
Other assets
 
3

 
2

Total assets
 
 
$
369

 
$
301

Liabilities:
 
 
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
 
$
59

 
$
33

Foreign currency contracts
Other liabilities
 
9

 
21

Commodity contracts
Accounts payable and accrued expenses
 
154

 
156

Commodity contracts
Other liabilities
 
19

 
17

Interest rate contracts
Other liabilities
 
1

 
2

Other derivative instruments
Accounts payable and accrued expenses
 
5

 
11

Other derivative instruments
Other liabilities
 
2

 

Total liabilities
 
 
$
249

 
$
240

1 
All of the Company's derivative instruments are carried at fair value in our 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 16 for the net presentation of the Company's derivative instruments.
2 
Refer to Note 16 for additional information related to the estimated fair value.
Derivative instruments, pretax impact that changes in the fair value of the derivatives designated as hedges had on AOCI and earnings
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 years ended December 31, 2015, 2014 and 2013 (in millions):
 
Gain (Loss)
Recognized
in Other
Comprehensive
Income ("OCI")

 
Location of Gain (Loss)
Recognized in Income1
 
Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)

 
Gain (Loss)
Recognized in Income
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)

 
2015
 
 
 
 
 
 
 
 
Foreign currency contracts
$
949

 
Net operating revenues
 
$
618

 
$
12

 
Foreign currency contracts
60

 
Cost of goods sold
 
62

 

2 
Foreign currency contracts
18

 
Interest expense
 
(9
)
 

 
Foreign currency contracts
(38
)
 
Other income (loss) — net
 
(40
)
 

 
Interest rate contracts
(153
)
 
Interest expense
 
(3
)
 
1

 
Commodity contracts
(1
)
 
Cost of goods sold
 
(3
)
 

 
Total
$
835

 
 
 
$
625

 
$
13

 
2014
 
 
 
 
 
 
 
 
Foreign currency contracts
$
973

 
Net operating revenues
 
$
121

 
$

2 
Foreign currency contracts
50

 
Cost of goods sold
 
34

 

2 
Foreign currency contracts
(218
)
 
Other income (loss) — net
 
(108
)
 

 
Interest rate contracts
(180
)
 
Interest expense
 

 

 
Commodity contracts

 
Cost of goods sold
 
3

 

 
Total
$
625

 
 
 
$
50

 
$

 
2013
 
 
 
 
 
 
 
 
Foreign currency contracts
$
218

 
Net operating revenues
 
$
149

 
$
1

 
Foreign currency contracts
52

 
Cost of goods sold
 
32

 

2 
Interest rate contracts
169

 
Interest expense
 
(12
)
 
(3
)
 
Commodity contracts
2

 
Cost of goods sold
 
(2
)
 

 
Total
$
441

 
 
 
$
167

 
$
(2
)
 
1 
The Company records gains and losses reclassified from AOCI into income for the effective portion and ineffective portion, if any, to the same line items in our consolidated statements of income.
2 
Includes a de minimis amount of ineffectiveness in the hedging relationship.
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 years ended December 31, 2015, 2014 and 2013 (in millions):
Hedging Instruments and Hedged Items
Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income1

2015
 
 
Interest rate contracts
Interest expense
$
(172
)
Fixed-rate debt
Interest expense
169

Net impact to interest expense
 
$
(3
)
Foreign currency contracts
Other income (loss) — net
$
110

Available-for-sale securities
Other income (loss) — net
(131
)
Net impact to other income (loss) — net
 
$
(21
)
Net impact of fair value hedging instruments
 
$
(24
)
2014
 
 
Interest rate contracts
Interest expense
$
18

Fixed-rate debt
Interest expense
11

Net impact to interest expense
 
$
29

Foreign currency contracts
Other income (loss) — net
$
132

Available-for-sale securities
Other income (loss) — net
(165
)
Net impact to other income (loss) — net
 
$
(33
)
Net impact of fair value hedging instruments
 
$
(4
)
2013
 
 
Interest rate contracts
Interest expense
$
(193
)
Fixed-rate debt
Interest expense
240

Net impact to interest expense
 
$
47

Foreign currency contracts
Other income (loss) — net
$
24

Available-for-sale securities
Other income (loss) — net
(48
)
Net impact to other income (loss) — net
 
$
(24
)
Net impact of fair value hedging instruments
 
$
23


1 The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.
Derivative instruments,fair value of net investment hedges, gain (loss) recognized in AOCI
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):
 
Notional Amount
 
Gain (Loss) Recognized in OCI
 
as of December 31,
 
Year Ended December 31,
 
2015

2014

 
2015

2014

2013

Foreign currency contracts
$
1,347

$
2,047

 
$
661

$
80

$
61

Foreign currency denominated debt
10,912


 
(24
)


Total
$
12,259

$
2,047

 
$
637

$
80

$
61


Derivative instruments, not designated as hedging instruments, gain (loss) in earnings
The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings during the years ended December 31, 2015, 2014 and 2013 (in millions):
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss)
Recognized in Income
 
Year Ended December 31,
 
2015

 
2014

 
2013

Foreign currency contracts
Net operating revenues
 
$
41

 
$
(6
)
 
$
5

Foreign currency contracts
Other income (loss) — net
 
(92
)
 
(85
)
 
162

Foreign currency contracts
Cost of goods sold
 
3

 

 
2

Commodity contracts
Net operating revenues
 
(16
)
 
(48
)
 
5

Commodity contracts
Cost of goods sold
 
(209
)
 
(8
)
 
(122
)
Commodity contracts
Selling, general and administrative expenses
 
(25
)
 
(79
)
 
7

Interest rate contracts
Interest expense
 

 

 
(3
)
Other derivative instruments
Selling, general and administrative expenses
 
1

 
24

 
55

Other derivative instruments
Other income (loss) — net
 
(37
)
 
39

 

Total
 
 
$
(334
)
 
$
(163
)
 
$
111