Quarterly report pursuant to Section 13 or 15(d)

Hedging Transactions and Derivative Financial Instruments (Tables)

v2.3.0.15
Hedging Transactions and Derivative Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2011
Hedging Transactions and Derivative Financial Instruments  
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
September 30, 2011

December 31, 2010

Assets
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
$
189

$
32

Commodity contracts
Prepaid expenses and other assets
3

4

Interest rate swaps
Other assets
242

—

Total assets
 
$
434

$
36

Liabilities
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
$
94

$
141

Commodity contracts
Accounts payable and accrued expenses
3

2

Interest rate swaps
Other liabilities
—

97

Total liabilities
 
$
97

$
240

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 September 30, 2011 (in millions):
Fair Value Hedging Instruments
Location of Gain (Loss)
Recognized in Income
 
Gain (Loss)
Recognized in Income

Interest rate swaps
Interest expense
 
$
271

Fixed-rate debt
Interest expense
 
(279
)
Net impact
 
 
$
(8
)
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 nine months ended September 30, 2011 (in millions):
Fair Value Hedging Instruments
Location of Gain (Loss)
Recognized in Income
 
Gain (Loss)
Recognized in Income

Interest rate swaps
Interest expense
 
$
339

Fixed-rate debt
Interest expense
 
(337
)
Net impact
 
 
$
2

The Company did not have any outstanding derivatives designated as fair value hedges during the three and nine months ended October 1, 2010. As a result, the tables above do not include comparative period financial data.
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 September 30, 2011 (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)

 
Foreign currency contracts
$
60

Net operating revenues
$
(80
)
$
—

2 
Interest rate locks
(11
)
Interest expense
(3
)
(1
)
 
Commodity contracts
(2
)
Cost of goods sold
1

—

 
Total
$
47

 
$
(82
)
$
(1
)
 

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 nine months ended September 30, 2011 (in millions):
 
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)

 
Foreign currency contracts
$
(91
)
Net operating revenues
$
(196
)
$
—

2 
Interest rate locks
(11
)
Interest expense
(9
)
(1
)
 
Commodity contracts
(2
)
Cost of goods sold
—

—

 
Total
$
(104
)
 
$
(205
)
$
(1
)
 
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 October 1, 2010 (in millions):
 
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)

 
Foreign currency contracts
$
(419
)
Net operating revenues
$
8

$
—

 
Interest rate locks
—

Interest expense
(3
)
—

 
Commodity contracts
2

Cost of goods sold
—

—

 
Total
$
(417
)
 
$
5

$
—

 
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.
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 nine months ended October 1, 2010 (in millions):
 
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)

 
Foreign currency contracts
$
(271
)
Net operating revenues
$
36

$
(2
)
 
Interest rate locks
—

Interest expense
(9
)
—

 
Commodity contracts
—

Cost of goods sold
—

—

 
Total
$
(271
)
 
$
27

$
(2
)
 
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.
Derivatives, Fair Value [Line Items]  
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
September 30, 2011

December 31, 2010

Assets
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
$
189

$
32

Commodity contracts
Prepaid expenses and other assets
3

4

Interest rate swaps
Other assets
242

—

Total assets
 
$
434

$
36

Liabilities
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
$
94

$
141

Commodity contracts
Accounts payable and accrued expenses
3

2

Interest rate swaps
Other liabilities
—

97

Total liabilities
 
$
97

$
240

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):
 
 
    Fair Value1, 2  
Derivatives Not Designated as
Hedging Instruments
Balance Sheet Location1
September 30, 2011

December 31, 2010

Assets
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
$
110

$
65

Commodity contracts
Prepaid expenses and other assets
60

56

Other derivative instruments
Prepaid expenses and other assets
4

17

Total assets
 
$
174

$
138

Liabilities
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
$
45

$
144

Commodity contracts
Accounts payable and accrued expenses
118

—

Other derivative instruments
Accounts payable and accrued expenses
4

—

Total liabilities
 
$
167

$
144

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 September 30, 2011 (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)

 
Foreign currency contracts
$
60

Net operating revenues
$
(80
)
$
—

2 
Interest rate locks
(11
)
Interest expense
(3
)
(1
)
 
Commodity contracts
(2
)
Cost of goods sold
1

—

 
Total
$
47

 
$
(82
)
$
(1
)
 

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 nine months ended September 30, 2011 (in millions):
 
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)

 
Foreign currency contracts
$
(91
)
Net operating revenues
$
(196
)
$
—

2 
Interest rate locks
(11
)
Interest expense
(9
)
(1
)
 
Commodity contracts
(2
)
Cost of goods sold
—

—

 
Total
$
(104
)
 
$
(205
)
$
(1
)
 
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 October 1, 2010 (in millions):
 
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)

 
Foreign currency contracts
$
(419
)
Net operating revenues
$
8

$
—

 
Interest rate locks
—

Interest expense
(3
)
—

 
Commodity contracts
2

Cost of goods sold
—

—

 
Total
$
(417
)
 
$
5

$
—

 
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.
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 nine months ended October 1, 2010 (in millions):
 
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)

 
Foreign currency contracts
$
(271
)
Net operating revenues
$
36

$
(2
)
 
Interest rate locks
—

Interest expense
(9
)
—

 
Commodity contracts
—

Cost of goods sold
—

—

 
Total
$
(271
)
 
$
27

$
(2
)
 
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.
Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) [Table Text Block]
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 September 30, 2011, and October 1, 2010 (in millions):
 
Gain (Loss)
Recognized in OCI
 
 
September 30,
2011

October 1,
2010

Foreign currency contracts
$
13

$
(4
)
Total
$
13

$
(4
)

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 nine months ended September 30, 2011, and October 1, 2010 (in millions):
 
Gain (Loss)
Recognized in OCI
 
 
September 30,
2011

October 1,
2010

Foreign currency contracts
$
10

$
9

Total
$
10

$
9

The Company did not reclassify any deferred gains or losses related to net investment hedges from AOCI to earnings during the three and nine months ended September 30, 2011, and October 1, 2010. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three and nine months ended September 30, 2011, and October 1, 2010, respectively.
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 during the three and nine months ended September 30, 2011, and October 1, 2010,
respectively (in millions):
 
 
Three Months Ended
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss)
Recognized in Income
September 30,
2011

October 1,
2010

Foreign currency contracts
Net operating revenues
$
4

$
(20
)
Foreign currency contracts
Other income (loss) — net
11

25

Foreign currency contracts
Cost of goods sold
—

(2
)
Commodity contracts
Cost of goods sold
(63
)
7

Commodity contracts
Selling, general and administrative expenses
(23
)
—

Other derivative instruments
Selling, general and administrative expenses
(12
)
19

Total
 
$
(83
)
$
29

 
 
Nine Months Ended
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss)
Recognized in Income
September 30,
2011

October 1,
2010

Foreign currency contracts
Net operating revenues
$
(1
)
$
(16
)
Foreign currency contracts
Other income (loss) — net
212

10

Foreign currency contracts
Cost of goods sold
(13
)
(2
)
Commodity contracts
Cost of goods sold
(21
)
4

Commodity contracts
Selling, general and administrative expenses
(19
)
—

Other derivative instruments
Selling, general and administrative expenses
(4
)
5

Total
 
$
154

$
1