Financial Instruments (Tables)
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6 Months Ended |
Jun. 30, 2020 |
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| Investments, Debt and Equity Securities [Abstract] |
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| Fair Value of Financial Instruments |
The following table summarizes the fair value of financial instruments at June 30, 2020 and December 31, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value of Financial Instruments | Jun 30, 2020 | | | | Dec 31, 2019 | | | | | In millions | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value | | Cash equivalents: | | | | | | | | | Held-to-maturity securities 1 | $ | 297 | | $ | — | | $ | — | | $ | 297 | | $ | 220 | | $ | — | | $ | — | | $ | 220 | | | Money market funds | 519 | | — | | — | | 519 | | 408 | | — | | — | | 408 | | | Total cash equivalents | $ | 816 | | $ | — | | $ | — | | $ | 816 | | $ | 628 | | $ | — | | $ | — | | $ | 628 | | | Marketable securities | $ | 2 | | $ | — | | $ | — | | $ | 2 | | $ | 21 | | $ | — | | $ | — | | $ | 21 | | | Other investments: | | | | | | | | | | Debt securities: | | | | | | | | | Government debt 2 | $ | 506 | | $ | 28 | | $ | (19) | | $ | 515 | | $ | 533 | | $ | 33 | | $ | (11) | | $ | 555 | | | Corporate bonds | 882 | | 87 | | (35) | | 934 | | 944 | | 80 | | (10) | | 1,014 | | | Total debt securities | $ | 1,388 | | $ | 115 | | $ | (54) | | $ | 1,449 | | $ | 1,477 | | $ | 113 | | $ | (21) | | $ | 1,569 | | Equity securities 3 | 8 | | 1 | | (1) | | 8 | | 10 | | 6 | | (1) | | 15 | | Total other investments | $ | 1,396 | | $ | 116 | | $ | (55) | | $ | 1,457 | | $ | 1,487 | | $ | 119 | | $ | (22) | | $ | 1,584 | | Total cash equivalents, marketable securities and other investments | $ | 2,214 | | $ | 116 | | $ | (55) | | $ | 2,275 | | $ | 2,136 | | $ | 119 | | $ | (22) | | $ | 2,233 | | Long-term debt including debt due within one year 4 | $ | (16,739) | | $ | 182 | | $ | (2,560) | | $ | (19,117) | | $ | (16,410) | | $ | 7 | | $ | (2,258) | | $ | (18,661) | | | Derivatives relating to: | | | | | | | | | Interest rates 5 | $ | — | | $ | 190 | | $ | (323) | | $ | (133) | | $ | — | | $ | 8 | | $ | (283) | | $ | (275) | | | Foreign currency | — | | 43 | | (26) | | 17 | | — | | 101 | | (21) | | 80 | | Commodities 5 | — | | 105 | | (201) | | (96) | | — | | 59 | | (115) | | (56) | | | Total derivatives | $ | — | | $ | 338 | | $ | (550) | | $ | (212) | | $ | — | | $ | 168 | | $ | (419) | | $ | (251) | |
1. The Company's held-to-maturity securities primarily included treasury bills and time deposits. 2. U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities’ obligations. 3. Equity securities with a readily determinable fair value. 4. Cost includes fair value hedge adjustment gains of $68 million at June 30, 2020 and $1 million at December 31, 2019 on $2,790 million of debt at June 30, 2020 and $3,490 million of debt at December 31, 2019. 5. Presented net of cash collateral where master netting arrangements allow.
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| Investing Results |
The following table provides the investing results from available-for-sale securities for the six months ended June 30, 2020 and 2019: | | | | | | | | | | Investing Results | Six Months Ended | | | In millions | Jun 30,
2020 | Jun 30,
2019 | | Proceeds from sales of available-for-sale securities | $ | 542 | | $ | 534 | | | Gross realized gains | $ | 51 | | $ | 22 | | | Gross realized losses | $ | (17) | | $ | (10) | |
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| Contractual Maturities of Debt Securities |
The following table summarizes the contractual maturities of the Company's investments in debt securities:
| | | | | | | | | Contractual Maturities of Debt Securities at Jun 30, 2020 1 | Cost | Fair Value | | In millions | | | | Within one year | $ | 18 | | $ | 18 | | | One to five years | 376 | | 379 | | | Six to ten years | 486 | | 494 | | | After ten years | 508 | | 558 | | | Total | $ | 1,388 | | $ | 1,449 | |
1.Includes marketable securities with maturities of less than one year.
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| Fair Value and Gross Unrealized Losses of Investments Temporarily Impaired |
The following table provides the fair value and gross unrealized losses of the Company’s investments in debt securities that were deemed to be temporarily impaired at June 30, 2020 and December 31, 2019, aggregated by investment category:
| | | | | | | | | | | | | | | | | | | | | | Temporarily Impaired Debt Securities | Less than 12 months | | 12 months or more | | Total | | | Fair
Value | Unrealized
Losses | Fair
Value | Unrealized
Losses | Fair Value | Unrealized Losses | | In millions | | | | | | | | Jun 30, 2020 | | | | | | | Government debt 1 | $ | 69 | | $ | (9) | | $ | 7 | | $ | (10) | | $ | 76 | | $ | (19) | | | Corporate bonds | 235 | | (22) | | 19 | | (13) | | 254 | | (35) | | | Total temporarily impaired debt securities | $ | 304 | | $ | (31) | | $ | 26 | | $ | (23) | | $ | 330 | | $ | (54) | | | Dec 31, 2019 | | | | | | | Government debt 1 | $ | 55 | | $ | (3) | | $ | 23 | | $ | (8) | | $ | 78 | | $ | (11) | | | Corporate bonds | 79 | | (3) | | 52 | | (7) | | 131 | | (10) | | | Total temporarily impaired debt securities | $ | 134 | | $ | (6) | | $ | 75 | | $ | (15) | | $ | 209 | | $ | (21) | |
1.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities' obligations.
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| Equity Securities with and without Readily Determinable Fair Value |
| | | | | | | | | | Investments in Equity Securities | Jun 30, 2020 | Dec 31, 2019 | | In millions | | | | Readily determinable fair value | $ | 8 | | $ | 15 | | | Not readily determinable fair value | $ | 182 | | $ | 189 | |
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| Schedule of Notional Amounts of Outstanding Derivative Positions |
The notional amounts of the Company's derivative instruments presented on a net basis at June 30, 2020 and December 31, 2019 were as follows:
| | | | | | | | | | Notional Amounts - Net | Jun 30, 2020 | Dec 31, 2019 | | In millions | | | | Derivatives designated as hedging instruments: | | | | Interest rate contracts | $ | 917 | | $ | 922 | | | Foreign currency contracts | $ | 3,326 | | $ | 6,253 | | | Derivatives not designated as hedging instruments: | | | | Interest rate contracts | $ | 93 | | $ | 145 | | | Foreign currency contracts | $ | 6,202 | | $ | 5,567 | |
The notional amounts of the Company's commodity derivatives presented on a net basis at June 30, 2020 and December 31, 2019 were as follows:
| | | | | | | | | | | | | Commodity Notionals - Net | Jun 30, 2020 | Dec 31, 2019 | Notional Volume Unit | | Derivatives designated as hedging instruments: | | | | | Hydrocarbon derivatives | 19.7 | 6.1 | million barrels of oil equivalent | | Derivatives not designated as hedging instruments: | | | | | Hydrocarbon derivatives | 1.2 | 0.1 | million barrels of oil equivalent | | Power derivatives | 45.0 | 87.5 | thousands of megawatt hours |
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| Schedule of Fair Values of Derivative Instruments |
The following tables provide the fair value and balance sheet classification of derivative instruments at June 30, 2020 and December 31, 2019:
| | | | | | | | | | | | | | | | Fair Value of Derivative Instruments | | Jun 30, 2020 | | | | In millions | Balance Sheet Classification | Gross | Counterparty and Cash Collateral Netting 1 | Net Amounts Included in the Consolidated Balance Sheets | | Asset derivatives | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate contracts | Other current assets | $ | 171 | | $ | (130) | | $ | 41 | | | Foreign currency contracts | Other current assets | 66 | | (53) | | 13 | | | Commodity contracts | Other current assets | 117 | | (70) | | 47 | | | Commodity contracts | Deferred charges and other assets | 80 | | (33) | | 47 | | | Total | | $ | 434 | | $ | (286) | | $ | 148 | | Derivatives not designated as hedging instruments: | | | | | | | | | | | Interest rate contracts | Deferred charges and other assets | $ | 149 | | $ | — | | $ | 149 | | | Foreign currency contracts | Other current assets | 61 | | (31) | | 30 | | | Commodity contracts | Other current assets | 11 | | (2) | | 9 | | | Commodity contracts | Deferred charges and other assets | 2 | | — | | 2 | | | Total | | $ | 223 | | $ | (33) | | $ | 190 | | | Total asset derivatives | | $ | 657 | | $ | (319) | | $ | 338 | | | | | | | | Liability derivatives | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate contracts | Accrued and other current liabilities | $ | 130 | | $ | (130) | | $ | — | | | Interest rate contracts | Other noncurrent obligations | 1 | | — | | 1 | | | Foreign currency contracts | Accrued and other current liabilities | 62 | | (53) | | 9 | | | Commodity contracts | Accrued and other current liabilities | 158 | | (76) | | 82 | | | Commodity contracts | Other noncurrent obligations | 141 | | (33) | | 108 | | | Total | | $ | 492 | | $ | (292) | | $ | 200 | | Derivatives not designated as hedging instruments: | | | | | | | | | | | Interest rate contracts | Other noncurrent obligations | $ | 322 | | $ | — | | $ | 322 | | | Foreign currency contracts | Accrued and other current liabilities | 48 | | (31) | | 17 | | | Commodity contracts | Accrued and other current liabilities | 12 | | (2) | | 10 | | | Commodity contracts | Other noncurrent obligations | 1 | | — | | 1 | | | Total | | $ | 383 | | $ | (33) | | $ | 350 | | | Total liability derivatives | | $ | 875 | | $ | (325) | | $ | 550 | |
1. Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty. | | | | | | | | | | | | | | | | Fair Value of Derivative Instruments | | Dec 31, 2019 | | | | In millions | Balance Sheet Classification | Gross | Counterparty and Cash Collateral Netting 1 | Net Amounts Included in the Consolidated Balance Sheets | | Asset derivatives | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate contracts | Other current assets | $ | 21 | | $ | (13) | | $ | 8 | | | Foreign currency contracts | Other current assets | 105 | | (36) | | 69 | | | Commodity contracts | Other current assets | 44 | | (25) | | 19 | | | Commodity contracts | Deferred charges and other assets | 28 | | (3) | | 25 | | | Total | | $ | 198 | | $ | (77) | | $ | 121 | | Derivatives not designated as hedging instruments: | | | | | | Interest rate contracts | Other current assets | $ | 14 | | $ | (14) | | $ | — | | | | | | | | Foreign currency contracts | Other current assets | 44 | | (12) | | 32 | | | Commodity contracts | Other current assets | 18 | | (3) | | 15 | | | | | | | | Total | | $ | 76 | | $ | (29) | | $ | 47 | | | Total asset derivatives | | $ | 274 | | $ | (106) | | $ | 168 | | | | | | | | Liability derivatives | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate contracts | Accrued and other current liabilities | $ | 23 | | $ | (13) | | $ | 10 | | | Interest rate contracts | Other noncurrent obligations | 1 | | — | | 1 | | | Foreign currency contracts | Accrued and other current liabilities | 46 | | (36) | | 10 | | | Commodity contracts | Accrued and other current liabilities | 95 | | (29) | | 66 | | | Commodity contracts | Other noncurrent obligations | 38 | | (4) | | 34 | | | Total | | $ | 203 | | $ | (82) | | $ | 121 | | Derivatives not designated as hedging instruments: | | | | | | Interest rate contracts | Accrued and other current liabilities | $ | 136 | | $ | (14) | | $ | 122 | | | Interest rate contracts | Other noncurrent obligations | 150 | | — | | 150 | | | Foreign currency contracts | Accrued and other current liabilities | 23 | | (12) | | 11 | | | Commodity contracts | Accrued and other current liabilities | 17 | | (3) | | 14 | | | Commodity contracts | Other noncurrent obligations | 1 | | — | | 1 | | | Total | | $ | 327 | | $ | (29) | | $ | 298 | | | Total liability derivatives | | $ | 530 | | $ | (111) | | $ | 419 | |
1. Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
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| Derivative Instruments, Gain (Loss) |
| | | | | | | | | | | | | | | | | | | Effect of Derivative Instruments | Amount of gain (loss) recognized in OCI 1 | | Amount of gain (loss) recognized in income 2 | | Income Statement Classification | | Three months ended | | Three months ended | | | | In millions | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | | Derivatives designated as hedging
instruments: | | | | | | | Fair value hedges: | | | | | | | | | | | | Excluded components 3 | $ | 4 | | $ | (4) | | $ | — | | $ | — | | Interest expense and amortization
of debt discount | | Cash flow hedges: | | | | | | | Interest rate contracts | — | | (130) | | — | | — | | Interest expense and amortization
of debt discount | | Foreign currency contracts | (5) | | (1) | | 5 | | 8 | | Cost of sales | | Foreign currency contracts | — | | 1 | | — | | — | | Sundry income (expense) - net | | Commodity contracts | 22 | | (41) | | (17) | | (26) | | Cost of sales | | Net foreign investment hedges: | | | | | | | Foreign currency contracts | (6) | | (128) | | — | | — | | | Excluded components 3 | 5 | | 66 | | 2 | | 25 | | Sundry income (expense) - net | Total derivatives designated as hedging
instruments | $ | 20 | | $ | (237) | | $ | (10) | | $ | 7 | | | Derivatives not designated as hedging
instruments: | | | | | | | Interest rate contracts | $ | — | | $ | — | | $ | (1) | | $ | — | | Interest expense and amortization
of debt discount | | Foreign currency contracts | — | | — | | 9 | | 38 | | Sundry income (expense) - net | | Commodity contracts | — | | — | | 6 | | (19) | | Cost of sales | Total derivatives not designated as
hedging instruments | $ | — | | $ | — | | $ | 14 | | $ | 19 | | | | Total derivatives | $ | 20 | | $ | (237) | | $ | 4 | | $ | 26 | | |
1. OCI is defined as other comprehensive income (loss). 2. Pretax amounts. 3. The excluded components are related to the time value of the derivatives designated as hedges. | | | | | | | | | | | | | | | | | | | Effect of Derivative Instruments | Amount of gain (loss) recognized in OCI 1 | | Amount of gain (loss) recognized in income 2 | | Income Statement Classification | | Six months ended | | Six months ended | | | | In millions | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | | Derivatives designated as hedging
instruments: | | | | | | | Fair value hedges: | | | | | | | Interest rate contracts | $ | — | | $ | — | | $ | 24 | | $ | — | | Interest expense and amortization of debt discount 3 | Excluded components 4 | 7 | | (4) | | — | | — | | Interest expense and amortization
of debt discount | | Cash flow hedges: | | | | | | | Interest rate contracts | — | | (236) | | — | | — | | Interest expense and amortization
of debt discount | | Foreign currency contracts | 3 | | 6 | | 9 | | 16 | | Cost of sales | | Foreign currency contracts | — | | 2 | | — | | — | | Sundry income (expense) - net | | Commodity contracts | (65) | | 14 | | (28) | | (26) | | Cost of sales | | Net foreign investment hedges: | | | | | | | Foreign currency contracts | 16 | | (98) | | — | | — | | | Excluded components 4 | 27 | | 152 | | 16 | | 50 | | Sundry income (expense) - net | Total derivatives designated as hedging
instruments | $ | (12) | | $ | (164) | | $ | 21 | | $ | 40 | | | Derivatives not designated as hedging
instruments: | | | | | | | Interest rate contracts | $ | — | | $ | — | | $ | (7) | | $ | — | | Interest expense and amortization
of debt discount | | Foreign currency contracts | — | | — | | (10) | | 6 | | Sundry income (expense) - net | | Commodity contracts | — | | — | | 17 | | (31) | | Cost of sales | Total derivatives not designated as
hedging instruments | $ | — | | $ | — | | $ | — | | $ | (25) | | | | Total derivatives | $ | (12) | | $ | (164) | | $ | 21 | | $ | 15 | | |
1. OCI is defined as other comprehensive income (loss). 2. Pretax amounts. 3. Gain (loss) recognized in income of derivatives is offset by gain (loss) recognized in income of the hedged item. 4. The excluded components are related to the time value of the derivatives designated as hedges.
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| Schedule of Hedging Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized Over Next Fiscal Year |
The following table provides the net after-tax amounts expected to be reclassified from AOCL to income within the next 12 months:
| | | | | | | Expected Reclassifications from AOCL within the next 12 months | Jun 30, 2020 | | In millions | | | Cash flow hedges: | | | Interest rate contracts | $ | 1 | | | Commodity contracts | $ | (28) | | | | | Net foreign investment hedges: | | | Excluded components | $ | 6 | |
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