Financial Instruments (Tables)
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9 Months Ended |
Sep. 30, 2019 |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Schedule of Pre-tax Effects of Derivative Instruments |
Pre-tax gains/(losses) recorded in net earnings for economic hedges were: | | | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | Location of Gain/(Loss) Recognized in Earnings | | 2019 | | 2018 | | 2019 | | 2018 | | | (in millions) | | | Currency exchange contracts: | | | | | | | | | | Intercompany loans and forecasted interest payments | $ | 60 |
| | $ | 16 |
| | $ | 71 |
| | $ | 30 |
| | Interest and other expense, net | Forecasted transactions | 50 |
| | 53 |
| | 30 |
| | 118 |
| | Cost of sales | Forecasted transactions | (1 | ) | | (1 | ) | | (2 | ) | | (6 | ) | | Interest and other expense, net | Forecasted transactions | (1 | ) | | 2 |
| | (6 | ) | | (2 | ) | | Selling, general and administrative expenses | Commodity contracts | (38 | ) | | (123 | ) | | 28 |
| | (22 | ) | | Cost of sales | Total | $ | 70 |
| | $ | (53 | ) | | $ | 121 |
| | $ | 118 |
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| Cash flow hedges |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Schedule of Cash Flow Hedges Effect on Accumulated Other Comprehensive Earnings/(Losses), Net of Taxes |
Cash flow hedge activity, net of taxes, within accumulated other comprehensive earnings/(losses) included: | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | Accumulated (loss)/gain at beginning of period | $ | (298 | ) | | $ | (133 | ) | | $ | (167 | ) | | $ | (113 | ) | Transfer of realized losses/(gains) in fair value to earnings | 111 |
| | — |
| | 123 |
| | (9 | ) | Unrealized (loss)/gain in fair value | (68 | ) | | 25 |
| | (211 | ) | | 14 |
| Accumulated (loss)/gain at end of period | $ | (255 | ) | | $ | (108 | ) | | $ | (255 | ) | | $ | (108 | ) |
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| Schedule of Pre-tax Effects of Derivative Instruments |
After-tax gains/(losses) reclassified from accumulated other comprehensive earnings/(losses) into net earnings were: | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | Interest rate contracts | $ | (111 | ) | | $ | — |
| | $ | (123 | ) | | $ | 9 |
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Within interest and other expense, net, we recognized a loss of $111 million in the three and nine months ended September 30, 2019 and gains of $1 million in the three months and $10 million in the nine months ended September 30, 2018 related to certain forward-starting interest rate swaps for which the planned timing and currency of the related forecasted debt was changed. We also recognized a loss of $12 million in the second quarter of 2019 in the net loss on equity method investment transactions. Refer to Note 7, Equity Method Investments - JDE / Keurig Exchange.
After-tax gains/(losses) recognized in other comprehensive earnings/(losses) were: | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | Currency exchange contracts – forecasted transactions | $ | — |
| | $ | — |
| | $ | 3 |
| | $ | — |
| Interest rate contracts | (68 | ) | | 25 |
| | (214 | ) | | 14 |
| Total | $ | (68 | ) | | $ | 25 |
| | $ | (211 | ) | | $ | 14 |
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| Net investment hedges |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Schedule of Hedges of Net Investments in International Operations |
After-tax gains/(losses) related to hedges of net investments in international operations in the form of euro, British pound sterling, Swiss franc and Canadian dollar-denominated debt were recorded within the cumulative translation adjustment section of other comprehensive income and were: | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | Euro notes | $ | 111 |
| | $ | 18 |
| | $ | 133 |
| | $ | 94 |
| British pound sterling notes | 8 |
| | 5 |
| | 9 |
| | 13 |
| Swiss franc notes | 24 |
| | (10 | ) | | 16 |
| | 6 |
| Canadian notes | 4 |
| | (6 | ) | | (10 | ) | | (2 | ) |
The impacts of the net investment hedge derivative contracts on other comprehensive earnings and net earnings were as follows:
| | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | After-tax gain/(loss) on NIH contracts(1) | $ | 193 |
| | $ | 22 |
| | $ | 260 |
| | $ | 281 |
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| | (1) | Amounts recorded for unsettled and settled NIH derivative contracts are recorded in the cumulative translation adjustment within other comprehensive earnings. The cash flows from the settled contracts are reported within other investing activities in the condensed consolidated statement of cash flows. |
| | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, | | For the Nine Months Ended
September 30, | | 2019 | | 2018 | | 2019 | | 2018 | | (in millions) | Amounts excluded from the assessment of hedge effectiveness(1) | $ | 34 |
| | $ | 34 |
| | $ | 101 |
| | $ | 84 |
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(1) We elected to record changes in the fair value of amounts excluded from the assessment of effectiveness in net earnings within interest and other expense, net.
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| Derivative |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Schedule of Fair Value of Derivatives Instruments |
Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows: | | | | | | | | | | | | | | | | | | As of September 30, 2019 | | As of December 31, 2018 | | Asset Derivatives | | Liability Derivatives | | Asset Derivatives | | Liability Derivatives | | (in millions) | Derivatives designated as accounting hedges: | | | | | | | | Interest rate contracts | $ | 51 |
| | $ | 153 |
| | $ | 17 |
| | $ | 355 |
| Net investment hedge derivative contracts (1) | 574 |
| | 2 |
| | 337 |
| | 28 |
| | $ | 625 |
| | $ | 155 |
| | $ | 354 |
| | $ | 383 |
| Derivatives not designated as accounting hedges: | | | | | | | | Currency exchange contracts | $ | 102 |
| | $ | 50 |
| | $ | 72 |
| | $ | 37 |
| Commodity contracts | 249 |
| | 208 |
| | 191 |
| | 210 |
| | $ | 351 |
| | $ | 258 |
| | $ | 263 |
| | $ | 247 |
| Total fair value | $ | 976 |
| | $ | 413 |
| | $ | 617 |
| | $ | 630 |
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(1) Net investment hedge contracts consist of cross-currency interest rate swaps and forward contracts. We also designate some of our non-U.S. dollar denominated debt to hedge a portion of our net investments in our non-U.S. operations. This debt is not reflected in the table above, but is included in long-term debt discussed in Note 9, Debt and Borrowing Arrangements. Both net investment hedge derivative contracts and non-U.S. dollar denominated debt acting as net investment hedges are also disclosed in the Derivative Volume table and the Hedges of Net Investments in International Operations section appearing later in this footnote.
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| Schedule of Derivative Instruments Fair Value and Measurement Inputs |
The fair values (asset/(liability)) of our derivative instruments were determined using: | | | | | | | | | | | | | | | | | | As of September 30, 2019 | | Total Fair Value of Net Asset/(Liability) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | (in millions) | Currency exchange contracts | $ | 52 |
| | $ | — |
| | $ | 52 |
| | $ | — |
| Commodity contracts | 41 |
| | 19 |
| | 22 |
| | — |
| Interest rate contracts | (102 | ) | | — |
| | (102 | ) | | — |
| Net investment hedge contracts | 572 |
| | — |
| | 572 |
| | — |
| Total derivatives | $ | 563 |
| | $ | 19 |
| | $ | 544 |
| | $ | — |
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| | | | | | | | | | | | | | | | | | As of December 31, 2018 | | Total Fair Value of Net Asset/(Liability) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | (in millions) | Currency exchange contracts | $ | 35 |
| | $ | — |
| | $ | 35 |
| | $ | — |
| Commodity contracts | (19 | ) | | (1 | ) | | (18 | ) | | — |
| Interest rate contracts | (338 | ) | | — |
| | (338 | ) | | — |
| Net investment hedge contracts | 309 |
| | — |
| | 309 |
| | — |
| Total derivatives | $ | (13 | ) | | $ | (1 | ) | | $ | (12 | ) | | $ | — |
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| Schedule of Notional Values of Derivative Instruments |
The notional values of our hedging instruments were: | | | | | | | | | | Notional Amount | | As of September 30, 2019 | | As of December 31, 2018 | | (in millions) | Currency exchange contracts: | | | | Intercompany loans and forecasted interest payments | $ | 4,695 |
| | $ | 3,239 |
| Forecasted transactions | 3,976 |
| | 2,396 |
| Commodity contracts | 45 |
| | 393 |
| Interest rate contracts | 6,500 |
| | 8,679 |
| Net investment hedges: | | | | Net investment hedge derivative contracts | 6,651 |
| | 6,678 |
| Non-U.S. dollar debt designated as net investment hedges | | | | Euro notes | 3,340 |
| | 3,514 |
| British pound sterling notes | 324 |
| | 336 |
| Swiss franc notes | 1,403 |
| | 1,424 |
| Canadian dollar notes | 453 |
| | 440 |
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