Quarterly report pursuant to Section 13 or 15(d)

Hedging Transactions and Derivative Financial Instruments (Tables)

v3.20.1
Hedging Transactions and Derivative Financial Instruments (Tables)
3 Months Ended
Mar. 27, 2020
Foreign Currency Fair Value Hedge Derivative [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
March 27,
2020

December 31, 2019

Assets:
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
$
140

$
24

Foreign currency contracts
Other assets
228

91

Interest rate contracts
Prepaid expenses and other assets
12

10

Interest rate contracts
Other assets
517

427

Total assets
 
$
897

$
552

Liabilities:
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
$
84

$
40

Foreign currency contracts
Other liabilities
231

48

Interest rate contracts
Other liabilities
23

21

Total liabilities
 
$
338

$
109

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.
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
March 27,
2020

December 31, 2019

Assets:
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
$
88

$
13

Foreign currency contracts
Other assets
2


Commodity contracts
Prepaid expenses and other assets
1

8

Commodity contracts
Other assets

2

Other derivative instruments
Prepaid expenses and other assets

12

Other derivative instruments
Other assets
1

1

Total assets
 
$
92

$
36

Liabilities:
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
$
130

$
39

Foreign currency contracts
Other liabilities
4


Commodity contracts
Accounts payable and accrued expenses
70

13

Commodity contracts
Other liabilities
28

1

Other derivative instruments
Accounts payable and accrued expenses
44


Total liabilities
 
$
276

$
53

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.
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 other comprehensive income ("OCI"), AOCI and earnings (in millions):
 
Gain (Loss)
Recognized in OCI
Location of Gain (Loss) Recognized in Income
Gain (Loss) Reclassified from AOCI into Income
Three Months Ended March 27, 2020
 
 
 
Foreign currency contracts
$
103

Net operating revenues
$
(4
)
Foreign currency contracts
11

Cost of goods sold
1

Foreign currency contracts

Interest expense
(2
)
Foreign currency contracts
(90
)
Other income (loss) — net
15

Interest rate contracts
8

Interest expense
(11
)
Total
$
32


$
(1
)
Three Months Ended March 29, 2019
 
 
 
Foreign currency contracts
$
(2
)
Net operating revenues
$
6

Foreign currency contracts
1

Cost of goods sold
4

Foreign currency contracts

Interest expense
(2
)
Foreign currency contracts
(22
)
Other income (loss) — net
(50
)
Interest rate contracts

Interest expense
(10
)
Total
$
(23
)
 
$
(52
)

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 (in millions):
Hedging Instruments and Hedged Items
Location of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Three Months Ended
March 27,
2020

March 29,
2019

Interest rate contracts
Interest expense
$
112

$
212

Fixed-rate debt
Interest expense
(103
)
(210
)
Net impact to interest expense
 
$
9

$
2

Net impact of fair value hedging instruments
 
$
9

$
2


Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]
The following table summarizes the amounts recorded in the condensed consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):
 
Carrying Value of Hedged Items
 
Cumulative Amount of Fair Value Hedging Adjustments Included in Carrying Value of Hedged Items1
Balance Sheet Location of Hedged Items
March 27,
2020

December 31,
2019

 
March 27,
2020

December 31,
2019

Current maturities of long-term debt
$
1,007

$
1,004

 
$
8

$
5

Long-term debt
12,123

12,087

 
539

448

1 Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rates.
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):
 
Notional Amount
 
Gain (Loss) Recognized in OCI
 
as of
 
Three Months Ended
 
March 27,
2020

December 31, 2019

 
March 27,
2020

March 29,
2019

Foreign currency contracts
$
491

$

 
$
(3
)
$
22

Foreign currency denominated debt
12,255

12,334

 
79

131

Total
$
12,746

$
12,334

 
$
76

$
153


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):
Derivatives Not Designated as Hedging Instruments
Location of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Three Months Ended
March 27,
2020

March 29,
2019

Foreign currency contracts
Net operating revenues
$
24

$
(11
)
Foreign currency contracts
Cost of goods sold
14

(1
)
Foreign currency contracts
Other income (loss) — net
(91
)
21

Commodity contracts
Cost of goods sold
(85
)
20

Other derivative instruments
Selling, general and administrative expenses
(56
)
17

Other derivative instruments
Other income (loss) — net
(57
)
34

Total
 
$
(251
)
$
80