Quarterly report pursuant to Section 13 or 15(d)

Hedging Transactions and Derivative Financial Instruments (Tables)

v3.21.1
Hedging Transactions and Derivative Financial Instruments (Tables)
 3 Months Ended
Apr. 02, 2021
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
April 2,
2021		 December 31, 2020
Assets:      
Foreign currency contracts Prepaid expenses and other assets $ 47  $ 26 
Foreign currency contracts Other assets 116  74 
Commodity contracts Prepaid expenses and other assets —  2 
Interest rate contracts Prepaid expenses and other assets 6  — 
Interest rate contracts Other assets 520  659 
Total assets   $ 689  $ 761 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 31  $ 29 
Foreign currency contracts Other liabilities 1  — 
Interest rate contracts Accounts payable and accrued expenses —  5 
Interest rate contracts Other liabilities 247  — 
Total liabilities   $ 279  $ 34 
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
April 2,
2021		 December 31, 2020
Assets:      
Foreign currency contracts Prepaid expenses and other assets $ 26  $ 28 
Foreign currency contracts Other assets 3  1 
Commodity contracts Prepaid expenses and other assets 140  76 
Commodity contracts Other assets 13  9 
Other derivative instruments Prepaid expenses and other assets 18  20 
Other derivative instruments Other assets —  3 
Total assets   $ 200  $ 137 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 40  $ 41 
Commodity contracts Accounts payable and accrued expenses 4  15 
Commodity contracts Other liabilities 2  1 
Total liabilities   $ 46  $ 57 
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 April 2, 2021
Foreign currency contracts $ (23) Net operating revenues $ (23)
Foreign currency contracts (5) Cost of goods sold (1)
Foreign currency contracts —  Interest expense (1)
Foreign currency contracts 87  Other income (loss) — net 66 
Interest rate contracts 121  Interest expense (5)
Total $ 180  $ 36 
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)
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
April 2,
2021		 March 27,
2020
Interest rate contracts Interest expense $ (395) $ 112 
Fixed-rate debt Interest expense 396  (103)
Net impact to interest expense   $ 1  $ 9 
Net impact of fair value hedging instruments $ 1  $ 9 
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 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 April 2,
2021		 December 31,
2020		 April 2,
2021		 December 31,
2020
Current maturities of long-term debt $ 1,245  $ —  $ 6  $ — 
Long-term debt 16,638  11,129  462  646 
1 Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rate fluctuations.
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 Values Gain (Loss) Recognized in OCI
as of Three Months Ended
  April 2,
2021		 December 31, 2020 April 2,
2021		 March 27,
2020
Foreign currency contracts $ 1,049  $ 451  $ (8) $ (3)
Foreign currency denominated debt 13,000  13,336  483  79 
Total $ 14,049  $ 13,787  $ 475  $ 76 
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
April 2,
2021		 March 27,
2020
Foreign currency contracts Net operating revenues $ (1) $ 24 
Foreign currency contracts Cost of goods sold (8) 14 
Foreign currency contracts Other income (loss) — net (28) (91)
Interest rate contracts Interest expense (187) — 
Commodity contracts Cost of goods sold 82  (85)
Other derivative instruments Selling, general and administrative expenses 8  (56)
Other derivative instruments Other income (loss) — net (3) (57)
Total   $ (137) $ (251)