Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At December 31, 2014, the Company was a party to 17 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below.



	2014
Debt Instrument	Par Value of Debt		Number of Interest Rate Swaps Held	Total Swap Notional Amount
0.70% notes due 2016	$	1,000	4	$	1,000
1.30% notes due 2018	1,000		4	1,000
5.00% notes due 2019	1,250		3	550
3.875% notes due 2021	1,150		5	1,150
2.40% notes due 2022	1,000		1	250

Fair Value of Derivatives on a Gross Basis Segregated Between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments as of December 31:



		2014						2013
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S. Dollar Notional
	Balance Sheet Caption	Asset		Liability		U.S. Dollar Notional		Asset		Liability		U.S. Dollar Notional
Derivatives Designated as Hedging Instruments
Interest rate swap contracts (non-current)	Other assets	$	19	$	—	$	1,950	$	13	$	—	$	1,550
Interest rate swap contracts (non-current)	Other noncurrent liabilities	—		15		2,000		—		25		2,000
Foreign exchange contracts (current)	Deferred income taxes and other current assets	772		—		5,513		493		—		4,427
Foreign exchange contracts (non-current)	Other assets	691		—		6,253		515		—		6,676
Foreign exchange contracts (current)	Accrued and other current liabilities	—		—		—		—		19		1,659
		$	1,482	$	15	$	15,716	$	1,021	$	44	$	16,312
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts (current)	Deferred income taxes and other current assets	$	365	$	—	$	6,966	$	69	$	—	$	5,705
Foreign exchange contracts (current)	Accrued and other current liabilities	—		88		3,386		—		140		7,892
		$	365	$	88	$	10,352	$	69	$	140	$	13,597
		$	1,847	$	103	$	26,068	$	1,090	$	184	$	29,909

Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis

The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes at December 31:



	2014						2013
	Asset			Liability			Asset			Liability
Gross amounts recognized in the consolidated balance sheet	$	1,847		$	103		$	1,090		$	184
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet	(97		)	(97		)	(147		)	(147		)
Cash collateral (received) posted	(1,410		)	—			(652		)	—
Net amounts	$	340		$	6		$	291		$	37

Location and Pretax Gain or Loss Amounts for Derivatives

The table below provides information on the location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a foreign currency cash flow hedging relationship, (iii) designated in a foreign currency net investment hedging relationship and (iv) not designated in a hedging relationship:



Years Ended December 31	2014			2013			2012
Derivatives designated in a fair value hedging relationship
Interest rate swap contracts
Amount of (gain) loss recognized in Other (income) expense, net on derivatives ⁽¹⁾	$	(17	)	$	12		$	—
Amount of loss (gain) recognized in Other (income) expense, net on hedged item ⁽¹⁾	14			(14		)	—
Derivatives designated in foreign currency cash flow hedging relationships
Foreign exchange contracts
Amount of (gain) loss reclassified from AOCI to Sales	(143		)	45			50
Amount of (gain) loss recognized in OCI on derivatives	(775		)	(306		)	204
Derivatives designated in foreign currency net investment hedging relationships
Foreign exchange contracts
Amount of gain recognized in Other (income) expense, net on derivatives ⁽²⁾	(6		)	(10		)	(20		)
Amount of gain recognized in OCI on derivatives	(192		)	(363		)	(208		)
Derivatives not designated in a hedging relationship
Foreign exchange contracts
Amount of (gain) loss recognized in Other (income) expense, net on derivatives ⁽³⁾	(516		)	183			382
Amount of loss recognized in Sales	15			8			30


⁽¹⁾	There was $3 million and $2 million of ineffectiveness on the hedge during 2014 and 2013, respectively.


⁽²⁾	There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing.


⁽³⁾	These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates

Information on Available-for-Sale Investments

Information on available-for-sale investments at December 31 is as follows:



	2014									2013
	Fair Value		Amortized Cost		Gross Unrealized					Fair Value		Amortized Cost		Gross Unrealized
	Fair Value		Amortized Cost		Gains		Losses			Fair Value		Amortized Cost		Gains		Losses
Corporate notes and bonds	$	10,107	$	10,102	$	22	$	(17	)	$	7,054	$	7,037	$	32	$	(15	)
Commercial paper	6,970		6,970		—		—			1,206		1,206		—		—
U.S. government and agency securities	1,774		1,775		1		(2		)	1,236		1,239		1		(4		)
Asset-backed securities	1,460		1,462		1		(3		)	1,300		1,303		1		(4		)
Mortgage-backed securities	602		604		2		(4		)	476		479		2		(5		)
Foreign government bonds	385		385		—		—			125		126		—		(1		)
Equity securities	730		557		173		—			471		397		74		—
	$	22,028	$	21,855	$	199	$	(26	)	$	11,868	$	11,787	$	110	$	(29	)

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis at December 31 are summarized below:



	Fair Value Measurements Using								Fair Value Measurements Using
	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	2014								2013
Assets
Investments
Corporate notes and bonds	$	—	$	10,107	$	—	$	10,107	$	—	$	7,054	$	—	$	7,054
Commercial paper	—		6,970		—		6,970		—		1,206		—		1,206
U.S. government and agency securities	—		1,774		—		1,774		—		1,236		—		1,236
Asset-backed securities ⁽¹⁾	—		1,460		—		1,460		—		1,300		—		1,300
Mortgage-backed securities ⁽¹⁾	—		602		—		602		—		476		—		476
Foreign government bonds	—		385		—		385		—		125		—		125
Equity securities	495		—		—		495		238		—		—		238
	495		21,298		—		21,793		238		11,397		—		11,635
Other assets
Securities held for employee compensation	181		54		—		235		186		47		—		233
Derivative assets ⁽²⁾
Purchased currency options	—		1,252		—		1,252		—		868		—		868
Forward exchange contracts	—		576		—		576		—		209		—		209
Interest rate swaps	—		19		—		19		—		13		—		13
	—		1,847		—		1,847		—		1,090		—		1,090
Total assets	$	676	$	23,199	$	—	$	23,875	$	424	$	12,534	$	—	$	12,958
Liabilities
Other liabilities
Contingent consideration	$	—	$	—	$	428	$	428	$	—	$	—	$	69	$	69
Derivative liabilities ⁽²⁾
Forward exchange contracts	—		46		—		46		—		134		—		134
Written currency options	—		42		—		42		—		25		—		25
Interest rate swaps	—		15		—		15		—		25		—		25
	—		103		—		103		—		184		—		184
Total liabilities	$	—	$	103	$	428	$	531	$	—	$	184	$	69	$	253

⁽¹⁾

Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by credit card, auto loan, and home equity receivables, with weighted-average lives of primarily 5 years or less. Mortgage-backed securities represent AAA-rated securities issued or unconditionally guaranteed as to payment of principal and interest by U.S. government agencies.


⁽²⁾	The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

Summarized Information about the Changes in Liabilities for Contingent Consideration

Summarized information about the changes in liabilities for contingent consideration is as follows:



	2014		2013
Fair value January 1	$	69	$	49
Changes in fair value (recorded in Research and development expenses)	316		8
Additions	43		12
Fair value December 31	$	428	$	69

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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