Current report filing

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v2.4.0.8
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
12 Months Ended
Dec. 31, 2012
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,
2012

 
December 31,
2011

Assets:
 
 
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
 
$
149

 
$
170

Commodity contracts
Prepaid expenses and other assets
 

 
2

Interest rate contracts
Prepaid expenses and other assets
 
7

 

Interest rate contracts
Other assets
 
335

 
246

Total assets
 
 
$
491

 
$
418

Liabilities:
 
 
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
 
$
55

 
$
41

Commodity contracts
Accounts payable and accrued expenses
 
1

 
1

Interest rate contracts
Other liabilities
 
6

 

Total liabilities
 
 
$
62

 
$
42

1 
All 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.
2 
Refer 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,
2012

 
December 31,
2011

Assets:
 
 
 
 
 
Foreign currency contracts
Prepaid expenses and other assets
 
$
19

 
$
29

Foreign currency contracts
Other assets
 
42

 

Commodity contracts
Prepaid expenses and other assets
 
72

 
54

Other derivative instruments
Prepaid expenses and other assets
 
6

 
5

Total assets
 
 
$
139

 
$
88

Liabilities:
 
 
 
 
 
Foreign currency contracts
Accounts payable and accrued expenses
 
$
24

 
$
116

Foreign currency contracts
Other liabilities
 
1

 

Commodity contracts
Accounts payable and accrued expenses
 
43

 
47

Commodity contracts
Other liabilities
 
1

 

Other derivative instruments
Accounts payable and accrued expenses
 
2

 
1

Total liabilities
 
 
$
71

 
$
164

1 
All 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.
2 
Refer 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 AOCI and earnings during the years ended December 31, 2012, 2011 and 2010 (in millions):
 
Gain (Loss)
Recognized
in Other
Comprehensive
Income ("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)

 
2012
 
 
 
 
 
 
 
 
Foreign currency contracts
$
59

 
Net operating revenues
 
$
(46
)
 
$
2

 
Foreign currency contracts
34

 
Cost of goods sold
 
(23
)
 

 
Interest rate contracts
1

 
Interest expense
 
(12
)
 

2 
Commodity contracts
(4
)
 
Cost of goods sold
 
(1
)
 

 
Total
$
90

 
 
 
$
(82
)
 
$
2

 
2011
 
 
 
 
 
 
 
 
Foreign currency contracts
$
3

 
Net operating revenues
 
$
(231
)
 
$

2 
Interest rate contracts
(11
)
 
Interest expense
 
(12
)
 
(1
)
 
Commodity contracts
(1
)
 
Cost of goods sold
 

 

 
Total
$
(9
)
 
 
 
$
(243
)
 
$
(1
)
 
2010
 
 
 
 
 
 
 
 
Foreign currency contracts
$
(307
)
 
Net operating revenues
 
$
(2
)
 
$
(2
)
 
Interest rate contracts

 
Interest expense
 
(15
)
 

 
Commodity contracts
1

 
Cost of goods sold
 

 

 
Total
$
(306
)
 
 
 
$
(17
)
 
$
(2
)
 
1 
The Company records gains and losses reclassified from AOCI in income for the effective portion and ineffective portion, if any, to the same line items in our consolidated statements of income.
2 
Includes a de minimis amount of ineffectiveness in the hedging relationship.
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 during the years ended December 31, 2012, 2011 and 2010 (in millions):
Hedging Instruments and Hedged Items
Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)

2012
 
 
Interest rate contracts
Interest expense
$
89

Fixed-rate debt
Interest expense
(42
)
Net impact to interest expense
 
$
47

Foreign currency contracts
Other income (loss) — net
$
42

Available-for-sale securities
Other income (loss) — net
(46
)
Net impact to other income (loss) — net
 
$
(4
)
Net impact of fair value hedging instruments
 
$
43

2011
 
 
Interest rate contracts
Interest expense
$
343

Fixed-rate debt
Interest expense
(333
)
Net impact to interest expense
 
$
10

2010
 
 
Interest rate contracts
Interest expense
$
(97
)
Fixed-rate debt
Interest expense
102

Net impact to interest expense
 
$
5

Derivative instruments,fair value of net investment hedges, gain (loss) recognized in AOCI
The following table presents the pretax impact that changes in the fair values of derivatives designated as net investment hedges had on AOCI during the years ended December 31, 2012, 2011 and 2010 (in millions):
 
Gain (Loss)
Recognized in OCI  
Year Ended December 31,
2012

 
2011

 
2010

Foreign currency contracts
$
(61
)
 
$
(3
)
 
$
(15
)
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 during the years ended December 31, 2012, 2011 and 2010 (in millions):
 
 
 
Gains (Losses)
Derivatives Not Designated
as Hedging Instruments
Location of Gains (Losses)
Recognized in Income
 
Year Ended December 31,
 
2012

 
2011

 
2010

Foreign currency contracts
Net operating revenues
 
$
(7
)
 
$
7

 
$
(15
)
Foreign currency contracts
Other income (loss) — net
 
24

 
(37
)
 
(46
)
Foreign currency contracts
Cost of goods sold
 

 
(12
)
 
(9
)
Commodity contracts
Net operating revenues
 
4

 

 

Commodity contracts
Cost of goods sold
 
(110
)
 
(42
)
 
40

Commodity contracts
Selling, general and administrative expenses
 
9

 
(11
)
 

Interest rate swaps
Interest expense
 

 

 
(5
)
Interest rate locks
Interest expense
 

 

 
(104
)
Other derivative instruments
Selling, general and administrative expenses
 
18

 
8

 
21

Total
 
 
$
(62
)
 
$
(87
)
 
$
(118
)