Annual report pursuant to Section 13 and 15(d)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v3.20.4
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2020
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,
2020		 December 31,
2019
Assets:      
Foreign currency contracts Prepaid expenses and other assets $ 26  $ 24 
Foreign currency contracts Other assets 74  91 
Commodity contracts Prepaid expenses and other assets 2  — 
Interest rate contracts Prepaid expenses and other assets —  10 
Interest rate contracts Other assets 659  427 
Total assets   $ 761  $ 552 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 29  $ 40 
Foreign currency contracts Other liabilities —  48 
Interest rate contracts Accounts payable and accrued expenses 5  — 
Interest rate contracts Other liabilities —  21 
Total liabilities   $ 34  $ 109 
1All 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.
2Refer 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,
2020		 December 31,
2019
Assets:      
Foreign currency contracts Prepaid expenses and other assets $ 28  $ 13 
Foreign currency contracts Other assets 1  — 
Commodity contracts Prepaid expenses and other assets 76  8 
Commodity contracts Other assets 9  2 
Other derivative instruments Prepaid expenses and other assets 20  12 
Other derivative instruments Other assets 3  1 
Total assets   $ 137  $ 36 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 41  $ 39 
Commodity contracts Accounts payable and accrued expenses 15  13 
Commodity contracts Other liabilities 1  1 
Total liabilities   $ 57  $ 53 
1All 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.
2Refer 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 OCI, AOCI and earnings (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)2
2020        
Foreign currency contracts $ (93) Net operating revenues $ (73) $ — 
Foreign currency contracts 4  Cost of goods sold 9  — 
Foreign currency contracts —  Interest expense (16) — 
Foreign currency contracts 37  Other income (loss) — net 60  — 
Interest rate contracts 15  Interest expense (54) — 
Commodity contracts 2  Cost of goods sold —  — 
Total $ (35) $ (74) $ — 
2019
Foreign currency contracts $ (58) Net operating revenues $ (3) $ — 
Foreign currency contracts 1  Cost of goods sold 11  — 
Foreign currency contracts —  Interest expense (9) — 
Foreign currency contracts (97) Other income (loss) — net (119) — 
Interest rate contracts (47) Interest expense (42) — 
Commodity contracts 1  Cost of goods sold —  — 
Total $ (200)   $ (162) $ — 
2018
Foreign currency contracts $ 9  Net operating revenues $ 136  $ 1 
Foreign currency contracts 15  Cost of goods sold 8  (3)
Foreign currency contracts —  Interest expense (9) — 
Foreign currency contracts 23  Other income (loss) — net (5) (4)
Interest rate contracts 22  Interest expense (40) (8)
Commodity contracts (1) Cost of goods sold —  (5)
Total $ 68  $ 90  $ (19)
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 consolidated statement of income.
2 Effective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. No components of the Company's hedging instruments were excluded from the assessment of hedge effectiveness.
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
2020
Interest rate contracts Interest expense $ 275 
Fixed-rate debt Interest expense (274)
Net impact to interest expense   $ 1 
Foreign currency contracts Other income (loss) — net $ (4)
Available-for-sale securities Other income (loss) — net 5 
Net impact to other income (loss) — net $ 1 
Net impact of fair value hedging instruments $ 2 
2019
Interest rate contracts Interest expense $ 368 
Fixed-rate debt Interest expense (369)
Net impact to interest expense   $ (1)
Net impact of fair value hedging instruments $ (1)
2018
Interest rate contracts Interest expense $ 34 
Fixed-rate debt Interest expense (38)
Net impact to interest expense $ (4)
Foreign currency contracts Other income (loss) — net $ (6)
Available-for-sale securities Other income (loss) — net 6 
Net impact to other income (loss) — net $ — 
Net impact of fair value hedging instruments $ (4)
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]
The following table summarizes the amounts recorded in the consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):
Carrying Values of Hedged Items
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Values of Hedged Items1
Balance Sheet Location of Hedged Items December 31,
2020		 December 31,
2019		 December 31,
2020		 December 31,
2019
Current maturities of long-term debt $ —  $ 1,004  $ —  $ 5 
Long-term debt 11,129  12,087  646  448 
1 Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rate fluctuations.
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,
  2020 2019 2020 2019 2018
Foreign currency contracts $ 451  $ —  $ (5) $ 51  $ (14)
Foreign currency denominated debt 13,336  12,334  (1,089) 144  653 
Total $ 13,787  $ 12,334  $ (1,094) $ 195  $ 639 
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 (in millions):
Derivatives Not Designated
as Hedging Instruments		 Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
Year Ended December 31,
2020 2019 2018
Foreign currency contracts Net operating revenues $ 58  $ (4) $ 22 
Foreign currency contracts Cost of goods sold 6  1  9 
Foreign currency contracts Other income (loss) — net (13) (66) (264)
Commodity contracts Cost of goods sold 54  (23) (25)
Interest rate contracts Interest expense 6  —  (1)
Other derivative instruments Selling, general and administrative expenses 21  47  (18)
Other derivative instruments Other income (loss) — net (55) 48  (22)
Total   $ 77  $ 3  $ (299)