Quarterly report pursuant to Section 13 or 15(d)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v3.22.2.2
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 9 Months Ended
Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
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
September 30,
2022		 December 31,
2021
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 391  $ 151 
Foreign currency contracts Other noncurrent assets 83  27 
Interest rate contracts Prepaid expenses and other current assets —  1 
Interest rate contracts Other noncurrent assets —  282 
Total assets   $ 474  $ 461 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 52  $ 15 
Foreign currency contracts Other noncurrent liabilities 151  17 
Interest rate contracts Other noncurrent liabilities 1,604  14 
Total liabilities   $ 1,807  $ 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
September 30,
2022		 December 31, 2021
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 105  $ 53 
Foreign currency contracts Other noncurrent assets 10  — 
Commodity contracts Prepaid expenses and other current assets 131  131 
Commodity contracts Other noncurrent assets —  3 
Other derivative instruments Prepaid expenses and other current assets —  9 
Total assets   $ 246  $ 196 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 22  $ 34 
Foreign currency contracts Other noncurrent liabilities 3  9 
Commodity contracts Accounts payable and accrued expenses 40  6 
Commodity contracts Other noncurrent liabilities 6  1 
Other derivative instruments Accounts payable and accrued expenses 19  — 
Total liabilities   $ 90  $ 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 tables present 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 September 30, 2022
Foreign currency contracts $ 197  Net operating revenues $ 88 
Foreign currency contracts 12  Cost of goods sold 10 
Foreign currency contracts —  Interest expense (1)
Foreign currency contracts (56) Other income (loss) — net (71)
Total $ 153  $ 26 
Three Months Ended October 1, 2021
Foreign currency contracts $ 15  Net operating revenues $ (21)
Foreign currency contracts 6  Cost of goods sold (6)
Foreign currency contracts —  Interest expense (1)
Foreign currency contracts (43) Other income (loss) — net (35)
Total
 $ (22)   $ (63)
Gain (Loss)
Recognized
in OCI		 Location of Gain (Loss) Recognized in Income Gain (Loss) Reclassified from AOCI into Income
Nine Months Ended September 30, 2022
Foreign currency contracts $ 475  Net operating revenues $ 148 
Foreign currency contracts 34  Cost of goods sold 13 
Foreign currency contracts —  Interest expense (3)
Foreign currency contracts (175) Other income (loss) — net (171)
Total $ 334  $ (13)
Nine Months Ended October 1, 2021
Foreign currency contracts $ (1) Net operating revenues $ (71)
Foreign currency contracts (5) Cost of goods sold (9)
Foreign currency contracts —  Interest expense (12)
Foreign currency contracts 15  Other income (loss) — net 49 
Interest rate contracts 110  Interest expense (90)
Total
 $ 119    $ (133)
Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location
The following tables summarize 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
September 30,
2022		 October 1,
2021
Interest rate contracts Interest expense $ (688) $ (56)
Fixed-rate debt Interest expense 705  55 
Net impact of fair value hedging instruments $ 17  $ (1)
Hedging Instruments and Hedged Items Location of Gain (Loss) Recognized in Income Gain (Loss)
Recognized in Income
Nine Months Ended
September 30,
2022		 October 1,
2021
Interest rate contracts Interest expense $ (1,873) $ (236)
Fixed-rate debt Interest expense 1,871  237 
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 September 30,
2022		 December 31,
2021		 September 30,
2022		 December 31,
2021		 September 30,
2022		 December 31,
2021
Current maturities of long-term debt $ —  $ 200  $ —  $ 1  $ —  $ — 
Long-term debt 11,243  12,353  (1,568) 255  203  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 Nine Months Ended
  September 30,
2022		 December 31,
2021		 September 30,
2022		 October 1,
2021		 September 30,
2022		 October 1,
2021
Foreign currency contracts $ 37  $ 40  $ (1) $ 6  $ (2) $ (1)
Foreign currency denominated debt 11,043  12,812  709  304  1,768  673 
Total $ 11,080  $ 12,852  $ 708  $ 310  $ 1,766  $ 672 
Derivative Instruments, Not Designated as Hedging Instruments, Gain (Loss) in Earnings
The following tables present 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
September 30,
2022		 October 1,
2021
Foreign currency contracts Net operating revenues $ 16  $ 2 
Foreign currency contracts Cost of goods sold 21  (10)
Foreign currency contracts Other income (loss) — net 41  (43)
Commodity contracts Cost of goods sold (10) (32)
Other derivative instruments Selling, general and administrative expenses (17) (2)
Total   $ 51  $ (85)
Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income Gain (Loss)
Recognized in Income
Nine Months Ended
September 30,
2022		 October 1,
2021
Foreign currency contracts Net operating revenues $ 23  $ 2 
Foreign currency contracts Cost of goods sold 44  (17)
Foreign currency contracts Other income (loss) — net 79  (39)
Interest rate contracts Interest expense —  (187)
Commodity contracts Cost of goods sold (5) 178 
Other derivative instruments Selling, general and administrative expenses (38) 18 
Other derivative instruments Other income (loss) — net —  (3)
Total   $ 103  $ (48)