Hedging Transactions and Derivative Financial Instruments (Tables)
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9 Months Ended |
Sep. 28, 2018 |
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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
|
September 28,
2018 |
|
December 31, 2017 |
|
Assets: |
|
|
|
Foreign currency contracts |
Prepaid expenses and other assets |
$ |
57 |
|
$ |
45 |
|
Foreign currency contracts |
Other assets |
133 |
|
79 |
|
Interest rate contracts |
Other assets |
25 |
|
52 |
|
Total assets |
|
$ |
215 |
|
$ |
176 |
|
Liabilities: |
|
|
|
Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
26 |
|
$ |
69 |
|
Foreign currency contracts |
Other liabilities |
4 |
|
9 |
|
Foreign currency contracts |
Liabilities held for sale — discontinued operations |
— |
|
8 |
|
Commodity contracts |
Liabilities held for sale — discontinued operations |
— |
|
4 |
|
Interest rate contracts |
Accounts payable and accrued expenses |
— |
|
30 |
|
Interest rate contracts |
Other liabilities |
68 |
|
39 |
|
Total liabilities |
|
$ |
98 |
|
$ |
159 |
|
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 15 for the net presentation of the Company's derivative instruments.
2 Refer to Note 15 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
|
Derivatives Not Designated as Hedging Instruments |
Balance Sheet Location1
|
September 28,
2018 |
|
December 31, 2017 |
|
Assets: |
|
|
|
Foreign currency contracts |
Prepaid expenses and other assets |
$ |
146 |
|
$ |
20 |
|
Foreign currency contracts |
Other assets |
9 |
|
27 |
|
Commodity contracts |
Prepaid expenses and other assets |
11 |
|
25 |
|
Commodity contracts |
Other assets |
— |
|
1 |
|
Other derivative instruments |
Prepaid expenses and other assets |
9 |
|
8 |
|
Total assets |
|
$ |
175 |
|
$ |
81 |
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Liabilities: |
|
|
|
Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
28 |
|
$ |
69 |
|
Foreign currency contracts |
Other liabilities |
54 |
|
28 |
|
Foreign currency contracts |
Liabilities held for sale — discontinued operations |
1 |
|
— |
|
Commodity contracts |
Accounts payable and accrued expenses |
9 |
|
7 |
|
Commodity contracts |
Other liabilities |
1 |
|
— |
|
Other derivative instruments |
Accounts payable and accrued expenses |
1 |
|
1 |
|
Other derivative instruments |
Other liabilities |
1 |
|
1 |
|
Total liabilities |
|
$ |
95 |
|
$ |
106 |
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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 15 for the net presentation of the Company's derivative instruments.
2 Refer to Note 15 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 tables present the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings (in millions):
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Gain (Loss) Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income1
|
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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Three Months Ended September 28, 2018 |
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|
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Foreign currency contracts |
$ |
2 |
|
Net operating revenues |
$ |
43 |
|
$ |
— |
|
2 |
Foreign currency contracts |
3 |
|
Cost of goods sold |
4 |
|
— |
|
2 |
Foreign currency contracts |
— |
|
Interest expense |
(2 |
) |
— |
|
|
Foreign currency contracts |
20 |
|
Other income (loss) — net |
23 |
|
2 |
|
|
Interest rate contracts |
— |
|
Interest expense |
(9 |
) |
— |
|
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Total |
$ |
25 |
|
|
$ |
59 |
|
$ |
2 |
|
|
Three Months Ended September 29, 2017 |
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|
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Foreign currency contracts |
$ |
(35 |
) |
Net operating revenues |
$ |
116 |
|
$ |
— |
|
2 |
Foreign currency contracts |
(11 |
) |
Cost of goods sold |
(4 |
) |
— |
|
2 |
Foreign currency contracts |
— |
|
Interest expense |
(2 |
) |
— |
|
|
Foreign currency contracts |
100 |
|
Other income (loss) — net |
100 |
|
7 |
|
|
Interest rate contracts |
(1 |
) |
Interest expense |
(9 |
) |
— |
|
|
Commodity contracts |
— |
|
Cost of goods sold |
(1 |
) |
— |
|
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Total |
$ |
53 |
|
|
$ |
200 |
|
$ |
7 |
|
|
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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Gain (Loss) Recognized
in 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) |
|
|
Nine Months Ended September 28, 2018 |
|
|
|
|
|
Foreign currency contracts |
$ |
10 |
|
Net operating revenues |
$ |
97 |
|
$ |
1 |
|
|
Foreign currency contracts |
13 |
|
Cost of goods sold |
5 |
|
— |
|
2 |
Foreign currency contracts |
— |
|
Interest expense |
(6 |
) |
— |
|
|
Foreign currency contracts |
46 |
|
Other income (loss) — net |
3 |
|
4 |
|
|
Foreign currency contracts |
— |
|
Income from discontinued operations |
— |
|
(3 |
) |
|
Interest rate contracts |
22 |
|
Interest expense |
(29 |
) |
(8 |
) |
|
Commodity contracts |
— |
|
Income from discontinued operations |
— |
|
(5 |
) |
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Total |
$ |
91 |
|
|
$ |
70 |
|
$ |
(11 |
) |
|
Nine Months Ended September 29, 2017 |
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|
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|
Foreign currency contracts |
$ |
(216 |
) |
Net operating revenues |
$ |
339 |
|
$ |
(1 |
) |
|
Foreign currency contracts |
(27 |
) |
Cost of goods sold |
1 |
|
— |
|
2 |
Foreign currency contracts |
— |
|
Interest expense |
(7 |
) |
— |
|
|
Foreign currency contracts |
113 |
|
Other income (loss) — net |
152 |
|
7 |
|
|
Interest rate contracts |
(25 |
) |
Interest expense |
(26 |
) |
2 |
|
|
Commodity contracts |
(1 |
) |
Cost of goods sold |
— |
|
— |
|
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Total |
$ |
(156 |
) |
|
$ |
459 |
|
$ |
8 |
|
|
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 tables summarize the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings (in millions):
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|
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|
Hedging Instruments and Hedged Items |
Location of Gain (Loss)
Recognized in Income
|
Gain (Loss)
Recognized in Income1
|
Three Months Ended |
September 28,
2018 |
|
September 29,
2017 |
|
Interest rate contracts |
Interest expense |
$ |
(38 |
) |
$ |
19 |
|
Fixed-rate debt |
Interest expense |
41 |
|
(15 |
) |
Net impact to interest expense |
|
$ |
3 |
|
$ |
4 |
|
Foreign currency contracts |
Other income (loss) — net |
$ |
— |
|
$ |
(23 |
) |
Available-for-sale securities |
Other income (loss) — net |
— |
|
26 |
|
|
Net impact to other income (loss) — net
|
|
$ |
— |
|
$ |
3 |
|
Net impact of fair value hedging instruments |
|
$ |
3 |
|
$ |
7 |
|
|
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|
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|
Hedging Instruments and Hedged Items |
Location of Gain (Loss)
Recognized in Income
|
Gain (Loss)
Recognized in Income1
|
Nine Months Ended |
September 28,
2018 |
|
September 29,
2017 |
|
Interest rate contracts |
Interest expense |
$ |
(57 |
) |
$ |
(46 |
) |
Fixed-rate debt |
Interest expense |
50 |
|
42 |
|
Net impact to interest expense |
|
$ |
(7 |
) |
$ |
(4 |
) |
Foreign currency contracts |
Other income (loss) — net |
$ |
(6 |
) |
$ |
(66 |
) |
Available-for-sale securities |
Other income (loss) — net |
6 |
|
72 |
|
Net impact to other income (loss) — net |
|
$ |
— |
|
$ |
6 |
|
Net impact of fair value hedging instruments |
|
$ |
(7 |
) |
$ |
2 |
|
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 |
|
Three Months Ended |
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Nine Months Ended |
|
September 28,
2018 |
|
December 31, 2017 |
|
|
September 28,
2018 |
|
September 29,
2017 |
|
|
September 28,
2018 |
|
September 29,
2017 |
|
Foreign currency contracts |
$ |
388 |
|
$ |
— |
|
|
$ |
6 |
|
$ |
(4 |
) |
|
$ |
6 |
|
$ |
(19 |
) |
Foreign currency denominated debt |
12,800 |
|
13,147 |
|
|
53 |
|
(549 |
) |
|
347 |
|
(1,475 |
) |
Total |
$ |
13,188 |
|
$ |
13,147 |
|
|
$ |
59 |
|
$ |
(553 |
) |
|
$ |
353 |
|
$ |
(1,494 |
) |
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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 tables present 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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|
|
|
|
|
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|
Derivatives Not Designated
as Hedging Instruments |
Location of Gain (Loss)
Recognized in Income |
Gain (Loss)
Recognized in Income
|
Three Months Ended |
September 28,
2018 |
|
September 29,
2017 |
|
Foreign currency contracts |
Net operating revenues |
$ |
8 |
|
$ |
(5 |
) |
Foreign currency contracts |
Cost of goods sold |
7 |
|
— |
|
Foreign currency contracts |
Other income (loss) — net |
29 |
|
47 |
|
Foreign currency contracts |
Income from discontinued operations |
2 |
|
— |
|
Commodity contracts |
Net operating revenues |
— |
|
12 |
|
Commodity contracts |
Cost of goods sold |
3 |
|
(15 |
) |
Commodity contracts |
Selling, general and administrative expenses |
— |
|
3 |
|
Other derivative instruments |
Selling, general and administrative expenses |
18 |
|
8 |
|
Other derivative instruments |
Other income (loss) — net |
— |
|
1 |
|
Total |
|
$ |
67 |
|
$ |
51 |
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated
as Hedging Instruments |
Location of Gain (Loss)
Recognized in Income |
Gain (Loss)
Recognized in Income
|
Nine Months Ended |
September 28,
2018 |
|
September 29,
2017 |
|
Foreign currency contracts |
Net operating revenues |
$ |
34 |
|
$ |
(23 |
) |
Foreign currency contracts |
Cost of goods sold |
6 |
|
— |
|
Foreign currency contracts |
Other income (loss) — net |
(87 |
) |
149 |
|
Foreign currency contracts |
Income from discontinued operations |
(3 |
) |
— |
|
Interest rate contracts |
Interest expense |
(1 |
) |
— |
|
Commodity contracts |
Net operating revenues |
— |
|
7 |
|
Commodity contracts |
Cost of goods sold |
10 |
|
13 |
|
Commodity contracts |
Income from discontinued operations |
5 |
|
— |
|
Other derivative instruments |
Selling, general and administrative expenses |
11 |
|
33 |
|
Other derivative instruments |
Other income (loss) — net |
— |
|
2 |
|
Total |
|
$ |
(25 |
) |
$ |
181 |
|
|