Quarterly report pursuant to Section 13 or 15(d)

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

v3.23.3
HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
 9 Months Ended
Sep. 29, 2023
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 29,
2023		 December 31,
2022
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 181  $ 126 
Foreign currency contracts Other noncurrent assets 38  13 
Interest rate contracts Prepaid expenses and other current assets 1  — 
Total assets   $ 220  $ 139 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 56  $ 54 
Foreign currency contracts Other noncurrent liabilities 55  108 
Commodity contracts Accounts payable and accrued expenses 8  2 
Interest rate contracts Accounts payable and accrued expenses 8  — 
Interest rate contracts Other noncurrent liabilities 1,665  1,676 
Total liabilities   $ 1,792  $ 1,840 
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 16 for the net presentation of the Company’s derivative instruments.
2Refer to Note 16 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 29,
2023		 December 31, 2022
Assets:      
Foreign currency contracts Prepaid expenses and other current assets $ 106  $ 46 
Foreign currency contracts Other noncurrent assets 10  22 
Commodity contracts Prepaid expenses and other current assets 22  34 
Commodity contracts Other noncurrent assets 3  — 
Total assets   $ 141  $ 102 
Liabilities:      
Foreign currency contracts Accounts payable and accrued expenses $ 29  $ 87 
Foreign currency contracts Other noncurrent liabilities 3  1 
Commodity contracts Accounts payable and accrued expenses 65  35 
Commodity contracts Other noncurrent liabilities 1  — 
Other derivative instruments Accounts payable and accrued expenses 10  3 
Total liabilities   $ 108  $ 126 
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 16 for the net presentation of the Company’s derivative instruments.
2Refer to Note 16 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 29, 2023
Foreign currency contracts $ 90  Net operating revenues $ (2)
Foreign currency contracts 8  Cost of goods sold — 
Foreign currency contracts —  Interest expense (1)
Foreign currency contracts (12) Other income (loss) — net (29)
Commodity contracts (5) Cost of goods sold (4)
Total $ 81  $ (36)
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 
Gain (Loss)
Recognized
in OCI		 Location of Gain (Loss) Recognized in Income Gain (Loss) Reclassified from AOCI into Income
Nine Months Ended September 29, 2023
Foreign currency contracts $ 32  Net operating revenues $ (8)
Foreign currency contracts 25  Cost of goods sold 8 
Foreign currency contracts —  Interest expense (3)
Foreign currency contracts (3) Other income (loss) — net (26)
Commodity contracts (16) Cost of goods sold (10)
Total $ 38  $ (39)
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)
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 29,
2023		 September 30,
2022
Interest rate contracts Interest expense $ (103) $ (688)
Fixed-rate debt Interest expense 109  705 
Net impact of fair value hedging instruments $ 6  $ 17 
Hedging Instruments and Hedged Items Location of Gain (Loss) Recognized in Income Gain (Loss)
Recognized in Income
Nine Months Ended
September 29,
2023		 September 30,
2022
Interest rate contracts Interest expense $ 3  $ (1,873)
Fixed-rate debt Interest expense 18  1,871 
Net impact of fair value hedging instruments $ 21  $ (2)
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 29,
2023		 December 31,
2022		 September 29,
2023		 December 31,
2022		 September 29,
2023		 December 31,
2022
Current maturities of long-term debt $ 528  $ —  $ (4) $ —  $ —  $ — 
Long-term debt 11,233  11,900  (1,685) (1,664) 171  195 
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 29,
2023		 December 31,
2022		 September 29,
2023		 September 30,
2022		 September 29,
2023		 September 30,
2022
Foreign currency contracts $ —  $ —  $ 1  $ (1) $ —  $ (2)
Foreign currency denominated debt 11,384  12,061  383  709  149  1,768 
Total $ 11,384  $ 12,061  $ 384  $ 708  $ 149  $ 1,766 
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 29,
2023		 September 30,
2022
Foreign currency contracts Net operating revenues $ 40  $ 16 
Foreign currency contracts Cost of goods sold (1) 21 
Foreign currency contracts Other income (loss) — net (15) 41 
Commodity contracts Cost of goods sold 40  (10)
Other derivative instruments Selling, general and administrative expenses (10) (17)
Total   $ 54  $ 51 
Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income Gain (Loss)
Recognized in Income
Nine Months Ended
September 29,
2023		 September 30,
2022
Foreign currency contracts Net operating revenues $ 23  $ 23 
Foreign currency contracts Cost of goods sold 50  44 
Foreign currency contracts Other income (loss) — net (15) 79 
Commodity contracts Cost of goods sold (90) (5)
Other derivative instruments Selling, general and administrative expenses (6) (38)
Total   $ (38) $ 103