Hedging Transactions and Derivative Financial Instruments (Tables)
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9 Months Ended |
Sep. 25, 2020 |
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| Foreign Currency Fair Value Hedge Derivative [Line Items] |
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| 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):
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Fair Value1,2
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| Derivatives Designated as Hedging Instruments |
Balance Sheet Location1
|
September 25,
2020 |
December 31, 2019 |
| Assets: |
|
|
|
| Foreign currency contracts |
Prepaid expenses and other assets |
$ |
17
|
|
$ |
24 |
|
| Foreign currency contracts |
Other assets |
73
|
|
91 |
|
|
|
|
|
| Interest rate contracts |
Prepaid expenses and other assets |
4
|
|
10 |
|
| Interest rate contracts |
Other assets |
683
|
|
427 |
|
| Total assets |
|
$ |
777
|
|
$ |
552 |
|
| Liabilities: |
|
|
|
| Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
46
|
|
$ |
40 |
|
| Foreign currency contracts |
Other liabilities |
10
|
|
48 |
|
| Commodity contracts |
Accounts payable and accrued expenses |
1
|
|
— |
|
|
|
|
|
| Interest rate contracts |
Other liabilities |
—
|
|
21 |
|
| Total liabilities |
|
$ |
57
|
|
$ |
109 |
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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.
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| 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):
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Fair Value1,2
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| Derivatives Not Designated as Hedging Instruments |
Balance Sheet Location1
|
September 25,
2020 |
December 31, 2019 |
| Assets: |
|
|
|
| Foreign currency contracts |
Prepaid expenses and other assets |
$ |
34
|
|
$ |
13 |
|
|
|
|
|
| Commodity contracts |
Prepaid expenses and other assets |
19
|
|
8 |
|
| Commodity contracts |
Other assets |
4
|
|
2 |
|
| Other derivative instruments |
Prepaid expenses and other assets |
8
|
|
12 |
|
| Other derivative instruments |
Other assets |
3
|
|
1 |
|
| Total assets |
|
$ |
68
|
|
$ |
36 |
|
| Liabilities: |
|
|
|
| Foreign currency contracts |
Accounts payable and accrued expenses |
$ |
41
|
|
$ |
39 |
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|
|
|
|
| Commodity contracts |
Accounts payable and accrued expenses |
36
|
|
13 |
|
| Commodity contracts |
Other liabilities |
11
|
|
1 |
|
|
|
|
|
|
|
|
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| Other derivative instruments |
Accounts payable and accrued expenses |
5
|
|
— |
|
|
|
|
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| Total liabilities |
|
$ |
93
|
|
$ |
53 |
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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.
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| Derivative instruments, designated as hedging instruments, gain (loss) in statement of financial performance |
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):
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Gain (Loss)
Recognized
in OCI |
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Reclassified from AOCI into Income |
| Three Months Ended September 25, 2020 |
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|
|
|
| Foreign currency contracts |
$ |
(84) |
|
|
Net operating revenues |
$ |
(21) |
|
| Foreign currency contracts |
(4) |
|
|
Cost of goods sold |
2
|
|
| Foreign currency contracts |
—
|
|
|
Interest expense |
(6) |
|
| Foreign currency contracts |
122
|
|
|
Other income (loss) — net |
100
|
|
| Interest rate contracts |
9
|
|
|
Interest expense |
(14) |
|
| Commodity contracts |
(2) |
|
|
Cost of goods sold |
(1) |
|
| Total |
$ |
41
|
|
|
|
$ |
60
|
|
| Three Months Ended September 27, 2019 |
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|
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| Foreign currency contracts |
$ |
71 |
|
|
Net operating revenues |
$ |
(5) |
|
| Foreign currency contracts |
3 |
|
|
Cost of goods sold |
2 |
|
| Foreign currency contracts |
— |
|
|
Interest expense |
(3) |
|
| Foreign currency contracts |
(46) |
|
|
Other income (loss) — net |
(46) |
|
| Interest rate contracts |
(30) |
|
|
Interest expense |
(10) |
|
| Commodity contracts |
1 |
|
|
Cost of goods sold |
— |
|
Total |
$ |
(1) |
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|
$ |
(62) |
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Gain (Loss)
Recognized
in OCI |
|
Location of Gain (Loss) Recognized in Income |
Gain (Loss) Reclassified from AOCI into Income |
| Nine Months Ended September 25, 2020 |
|
|
|
|
| Foreign currency contracts |
$ |
(61) |
|
|
Net operating revenues |
$ |
(22) |
|
| Foreign currency contracts |
6
|
|
|
Cost of goods sold |
7
|
|
| Foreign currency contracts |
—
|
|
|
Interest expense |
(10) |
|
| Foreign currency contracts |
21
|
|
|
Other income (loss) — net |
71
|
|
| Interest rate contracts |
21
|
|
|
Interest expense |
(35) |
|
| Commodity contracts |
(2) |
|
|
Cost of goods sold |
(1) |
|
| Total |
$ |
(15) |
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|
$ |
10
|
|
| Nine Months Ended September 27, 2019 |
|
|
|
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| Foreign currency contracts |
$ |
44 |
|
|
Net operating revenues |
$ |
2 |
|
| Foreign currency contracts |
1 |
|
|
Cost of goods sold |
9 |
|
| Foreign currency contracts |
— |
|
|
Interest expense |
(7) |
|
| Foreign currency contracts |
(99) |
|
|
Other income (loss) — net |
(139) |
|
| Interest rate contracts |
(47) |
|
|
Interest expense |
(30) |
|
| Commodity contracts |
1 |
|
|
Cost of goods sold |
— |
|
Total |
$ |
(100) |
|
|
|
$ |
(165) |
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| Derivative instruments, fair value hedges, gain (loss) recognized in income |
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):
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| Hedging Instruments and Hedged Items |
Location of Gain (Loss) Recognized in Income |
Gain (Loss)
Recognized in Income |
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Three Months Ended |
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|
September 25,
2020 |
September 27,
2019 |
| Interest rate contracts |
Interest expense |
$ |
94
|
|
$ |
206 |
|
| Fixed-rate debt |
Interest expense |
(97) |
|
(200) |
|
| Net impact to interest expense |
|
$ |
(3) |
|
$ |
6 |
|
| Foreign currency contracts |
Other income (loss) — net |
$ |
3
|
|
$ |
— |
|
| Available-for-sale securities |
Other income (loss) — net |
(3) |
|
— |
|
| Net impact to other income (loss) — net |
|
$ |
—
|
|
$ |
— |
|
| Net impact of fair value hedging instruments |
|
$ |
(3) |
|
$ |
6 |
|
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|
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| Hedging Instruments and Hedged Items |
Location of Gain (Loss) Recognized in Income |
Gain (Loss)
Recognized in Income |
|
|
|
Nine Months Ended |
|
|
|
September 25,
2020 |
September 27,
2019 |
| Interest rate contracts |
Interest expense |
$ |
284
|
|
$ |
647 |
|
| Fixed-rate debt |
Interest expense |
(281) |
|
(637) |
|
| Net impact to interest expense |
|
$ |
3
|
|
$ |
10 |
|
| Foreign currency contracts |
Other income (loss) — net |
$ |
3
|
|
$ |
— |
|
| Available-for-sale securities |
Other income (loss) — net |
(3) |
|
— |
|
| Net impact to other income (loss) — net |
|
$ |
—
|
|
$ |
— |
|
| Net impact of fair value hedging instruments |
|
$ |
3
|
|
$ |
10 |
|
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| 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):
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Carrying Value of Hedged Items |
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Cumulative Amount of Fair Value Hedging Adjustments Included in Carrying Value of Hedged Items1
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| Balance Sheet Location of Hedged Items |
September 25,
2020 |
December 31,
2019 |
|
September 25,
2020 |
December 31,
2019 |
| Cash and cash equivalents |
$ |
294
|
|
$ |
— |
|
|
$ |
—
|
|
$ |
— |
|
| Marketable securities |
201
|
|
— |
|
|
—
|
|
— |
|
| Current maturities of long-term debt |
2,038
|
|
1,004 |
|
|
(2) |
|
5 |
|
| Long-term debt |
10,685
|
|
12,087 |
|
|
670
|
|
448 |
|
1 Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rates.
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| 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):
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Notional Amount |
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|
Gain (Loss) Recognized in OCI |
|
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|
as of |
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|
Three Months Ended |
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|
Nine Months Ended |
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| |
September 25,
2020 |
December 31, 2019 |
|
September 25,
2020 |
September 27,
2019 |
|
September 25,
2020 |
September 27,
2019 |
| Foreign currency contracts |
$ |
—
|
|
$ |
— |
|
|
$ |
(23) |
|
$ |
13 |
|
|
$ |
(4) |
|
$ |
42 |
|
| Foreign currency denominated debt |
12,699
|
|
12,334 |
|
|
(445) |
|
476 |
|
|
(452) |
|
444 |
|
| Total |
$ |
12,699
|
|
$ |
12,334 |
|
|
$ |
(468) |
|
$ |
489 |
|
|
$ |
(456) |
|
$ |
486 |
|
|
| Schedule of Derivative Instruments Not Designated as Hedging Instruments Gain (Loss) in Statement of Financial Performance [Table Text Block] |
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):
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|
|
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|
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| Derivatives Not Designated as Hedging Instruments |
Location of Gain (Loss) Recognized in Income |
Gain (Loss)
Recognized in Income |
|
|
|
Three Months Ended |
|
|
|
September 25,
2020 |
September 27,
2019 |
| Foreign currency contracts |
Net operating revenues |
$ |
2
|
|
$ |
15 |
|
| Foreign currency contracts |
Cost of goods sold |
(17) |
|
2 |
|
| Foreign currency contracts |
Other income (loss) — net |
53
|
|
(21) |
|
| Interest rate contracts |
Interest expense |
2
|
|
— |
|
|
|
|
|
| Commodity contracts |
Cost of goods sold |
34
|
|
(60) |
|
|
|
|
|
| Other derivative instruments |
Selling, general and administrative expenses |
20
|
|
4 |
|
| Other derivative instruments |
Other income (loss) — net |
—
|
|
5 |
|
| Total |
|
$ |
94
|
|
$ |
(55) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivatives Not Designated as Hedging Instruments |
Location of Gain (Loss) Recognized in Income |
Gain (Loss)
Recognized in Income |
|
|
|
Nine Months Ended |
|
|
|
September 25,
2020 |
September 27,
2019 |
| Foreign currency contracts |
Net operating revenues |
$ |
64
|
|
$ |
2 |
|
| Foreign currency contracts |
Cost of goods sold |
10
|
|
4 |
|
| Foreign currency contracts |
Other income (loss) — net |
(33) |
|
(46) |
|
| Interest rate contracts |
Interest expense |
2
|
|
— |
|
|
|
|
|
| Commodity contracts |
Cost of goods sold |
(33) |
|
(58) |
|
|
|
|
|
| Other derivative instruments |
Selling, general and administrative expenses |
(12) |
|
32 |
|
| Other derivative instruments |
Other income (loss) — net |
(55) |
|
39 |
|
| Total |
|
$ |
(57) |
|
$ |
(27) |
|
|