Quarterly report pursuant to Section 13 or 15(d)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v3.22.1
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 3 Months Ended
Apr. 01, 2022
Foreign Currency Fair Value Hedge Derivative [Line Items]  
Fair value of derivative instruments designated and qualified as part of hedging relationship
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 1,
2022		 December 31,
2021
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 189  $ 151 
Foreign currency contracts Other noncurrent assets 66  27 
Interest rate contracts Prepaid expenses and other current assets —  1 
Interest rate contracts Other noncurrent assets —  282 
Total assets   $ 255  $ 461 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 40  $ 15 
Foreign currency contracts Other noncurrent liabilities 38  17 
Interest rate contracts Other noncurrent liabilities 442  14 
Total liabilities   $ 520  $ 46 
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 15 for the net presentation of the Company’s derivative instruments.
2Refer to Note 15 for additional information related to the estimated fair value.
Derivatives 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
April 1,
2022		 December 31, 2021
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 90  $ 53 
Foreign currency contracts Other noncurrent assets 11  — 
Commodity contracts Prepaid expenses and other current assets 270  131 
Commodity contracts Other noncurrent assets 18  3 
Other derivative instruments Prepaid expenses and other current assets 20  9 
Total assets   $ 409  $ 196 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 68  $ 34 
Foreign currency contracts Other noncurrent liabilities 1  9 
Commodity contracts Accounts payable and accrued expenses —  6 
Commodity contracts Other noncurrent liabilities 3  1 
Total liabilities   $ 72  $ 50 
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 15 for the net presentation of the Company’s derivative instruments.
2Refer to Note 15 for additional information related to the estimated fair value.
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) and Other Comprehensive Income (OCI)
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 1, 2022
Foreign currency contracts $ 81  Net operating revenues $ 8 
Foreign currency contracts 6  Cost of goods sold 1 
Foreign currency contracts —  Interest expense (1)
Foreign currency contracts (5) Other income (loss) — net (11)
Total $ 82  $ (3)
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 
Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location
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 1,
2022		 April 2,
2021
Interest rate contracts Interest expense $ (711) $ (395)
Fixed-rate debt Interest expense 709  396 
Net impact to interest expense   $ (2) $ 1 
Net impact of fair value hedging instruments $ (2) $ 1 
The following table summarizes the amounts recorded in our consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):
Cumulative Amount of Fair Value Hedging Adjustments1
Carrying Values of
Hedged Items		 Included in the Carrying Values of Hedged Items Remaining for Which Hedge Accounting Has Been Discontinued
Balance Sheet Location of Hedged Items April 1,
2022		 December 31,
2021		 April 1,
2022		 December 31,
2021		 April 1,
2022		 December 31,
2021
Current maturities of long-term debt $ —  $ 200  $ —  $ 1  $ —  $ — 
Long-term debt 11,443  12,353  (445) 255  220  228 
1Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rate fluctuations.
Notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges
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 1,
2022		 December 31,
2021		 April 1,
2022		 April 2,
2021
Foreign currency contracts $ 54  $ 40  $ (6) $ (8)
Foreign currency denominated debt 12,457  12,812  355  483 
Total $ 12,511  $ 12,852  $ 349  $ 475 
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
Three Months Ended
April 1,
2022		 April 2,
2021
Foreign currency contracts Net operating revenues $ (15) $ (1)
Foreign currency contracts Cost of goods sold 13  (8)
Foreign currency contracts Other income (loss) — net 42  (28)
Interest rate contracts Interest expense —  (187)
Commodity contracts Cost of goods sold 160  82 
Other derivative instruments Selling, general and administrative expenses (3) 8 
Other derivative instruments Other income (loss) — net —  (3)
Total   $ 197  $ (137)