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Hedging Transactions and Derivative Financial Instruments (Tables)
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6 Months Ended |
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Jul. 01, 2011
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| Hedging Transactions and Derivative Financial Instruments |
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| Derivative instruments, fair value, designated as hedging instruments |
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Fair Value1,2
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Derivatives Designated as
Hedging Instruments
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Balance Sheet Location1
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July 1,
2011
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December 31,
2010
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Assets
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Foreign currency contracts
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Prepaid expenses and other assets
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$ 88
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$ 32
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Commodity contracts
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Prepaid expenses and other assets
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4
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4
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Interest rate swaps
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Other assets
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21
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Total assets
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$ 113
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$ 36
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Liabilities
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Foreign currency contracts
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Accounts payable and accrued expenses
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$ 91
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$ 141
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Commodity contracts
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Accounts payable and accrued expenses
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2
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2
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Interest rate swaps
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Other liabilities
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49
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97
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Total liabilities
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$ 142
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$ 240
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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. However, current disclosure requirements mandate that derivatives must be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 14 for the net presentation of the Company's derivative instruments.
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2 Refer to Note 14 for additional information related to the estimated fair value.
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| Derivative instruments, fair value, not designated as hedging instruments |
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Fair Value1,2
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Derivatives Not Designated as
Hedging Instruments
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Balance Sheet Location1
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July 1,
2011
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December 31,
2010
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Assets
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Foreign currency contracts
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Prepaid expenses and other assets
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$ 94
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$ 65
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Commodity contracts
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Prepaid expenses and other assets
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52
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56
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Other derivative instruments
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Prepaid expenses and other assets
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5
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17
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Total assets
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$ 151
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$ 138
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Liabilities
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Foreign currency contracts
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Accounts payable and accrued expenses
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$ 32
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$ 144
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Commodity contracts
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Accounts payable and accrued expenses
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5
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Total liabilities
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$ 37
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$ 144
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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. However, current disclosure requirements mandate that derivatives must be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 14 for the net presentation of the Company's derivative instruments.
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2 Refer to Note 14 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 |
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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 July 1, 2011 (in millions):
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Gain (Loss)
Recognized
in Other
Comprehensive
Income ("OCI")
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Location of Gain (Loss)
Recognized in Income
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1 |
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
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$ (113
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Net operating revenues
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$ (66
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$
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Interest rate locks
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Interest expense
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(3
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Commodity contracts
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(2
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Cost of goods sold
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Total
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$ (115
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$ (69
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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.
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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 six months ended July 1, 2011 (in millions):
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Gain (Loss)
Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income
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1 |
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
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$ (151
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Net operating revenues
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$ (116
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$
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Interest rate locks
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Interest expense
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(6
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Commodity contracts
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Cost of goods sold
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(1
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Total
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$ (151
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$ (123
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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.
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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 July 2, 2010 (in millions):
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Gain (Loss)
Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income
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1 |
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
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$ 90
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Net operating revenues
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$ 32
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$ (2
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Interest rate locks
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Interest expense
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(3
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Commodity contracts
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(3
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Cost of goods sold
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Total
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$ 87
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$ 29
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$ (2
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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.
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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 six months ended July 2, 2010 (in millions):
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Gain (Loss)
Recognized
in OCI
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Location of Gain (Loss)
Recognized in Income
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1 |
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
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$ 148
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Net operating revenues
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$ 28
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$ (2
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Interest rate locks
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Interest expense
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(6
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Commodity contracts
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(2
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Cost of goods sold
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Total
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$ 146
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$ 22
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$ (2
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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.
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| Derivative instruments, fair value hedges, gain (loss) recognized in income |
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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 July 1, 2011 (in millions):
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Fair Value Hedging Instruments
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Location of Gain (Loss)
Recognized in Income
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Gain (Loss)
Recognized in Income
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Interest rate swaps
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Interest expense
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$ 116
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Fixed-rate debt
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Interest expense
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(111
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Net impact
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$ 5
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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 six months ended July 1, 2011 (in millions):
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Fair Value Hedging Instruments
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Location of Gain (Loss)
Recognized in Income
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Gain (Loss)
Recognized in Income
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Interest rate swaps
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Interest expense
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$ 68
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Fixed-rate debt
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Interest expense
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(58
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Net impact
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$ 10
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| Derivative instruments, fair value of net investment hedges, gain (loss) recognized in AOCI |
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The following table presents the pretax impact that changes in the fair values of derivatives designated as net investment hedges had on AOCI during the three months ended July 1, 2011, and July 2, 2010 (in millions):
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Gain (Loss)
Recognized in OCI |
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July 1,
2011 |
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July 2,
2010 |
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| Foreign currency contracts |
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$ (1 |
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$ 19 |
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| Total |
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$ (1 |
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$ 19 |
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The following table presents the pretax impact that changes in the fair values of derivatives designated as net investment hedges had on AOCI during the six months ended July 1, 2011, and July 2, 2010 (in millions):
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Gain (Loss)
Recognized in OCI |
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July 1,
2011 |
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July 2,
2010 |
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| Foreign currency contracts |
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$ (3 |
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$ 13 |
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| Total |
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$ (3 |
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$ 13 |
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| Derivative instruments, not designated as hedging instruments, gain (loss) in statement of financial performance |
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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 three months ended July 1, 2011, and July 2, 2010 (in millions):
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Three Months Ended
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Derivatives Not Designated
as Hedging Instruments
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Location of Gain (Loss)
Recognized in Income
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July 1,
2011
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July 2,
2010
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Foreign currency contracts
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Net operating revenues
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$ (2
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) |
$ 5
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Foreign currency contracts
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Other income (loss) net
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92
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(9
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) |
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Foreign currency contracts
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Cost of goods sold
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(7
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) |
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Commodity futures
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Cost of goods sold
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(10
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(3
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Commodity futures
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Selling, general and administrative expenses
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4
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Other derivative instruments
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Selling, general and administrative expenses
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(16
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Total
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$ 77
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$ (23
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Six Months Ended
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Derivatives Not Designated
as Hedging Instruments
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Location of Gain (Loss)
Recognized in Income
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July 1,
2011
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July 2,
2010
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Foreign currency contracts
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Net operating revenues
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$ (5
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) |
$ 4
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Foreign currency contracts
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Other income (loss) net
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201
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(15
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) |
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Foreign currency contracts
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Cost of goods sold
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(13
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Commodity futures
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Cost of goods sold
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42
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(3
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) |
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Commodity futures
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Selling, general and administrative expenses
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4
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Other derivative instruments
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Selling, general and administrative expenses
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8
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(14
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) |
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Total
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$ 237
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$ (28
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) |
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