XML 37 R22.htm IDEA: XBRL DOCUMENT v3.22.1
Derivative Financial Instruments and Hedging Activities (Notes)
 3 Months Ended
Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended March 31 were as follows (in millions):
 First Quarter
Cash flow hedges
20212022
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$(15)$(90)
Commodity contracts (b)
8 58 
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
101 76 
Fair value changes on hedging instruments(641)(986)
Fair value changes on hedged debt590 991 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(3)(3)
Fair value changes on hedging instruments(50)(37)
Fair value changes on hedged debt44 41 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)233 (46)
Cross-currency interest rate swap contracts
(245)(227)
Interest rate contracts(31)123 
Commodity contracts55 109 
Total$46 $9 
__________
(a)For the first quarter of 2021 and 2022, a $461 million loss and a $128 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the first quarter of 2021 and 2022, an $80 million gain and a $284 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the first quarter of 2021 and 2022, a $181 million gain and a $44 million loss, respectively, were reported in Cost of sales, and a $52 million gain and a $2 million loss, respectively, were reported in Other income/(loss), net.
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2021March 31, 2022
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$11,534 $74 $346 $10,359 $13 $336 
Commodity contracts931 182 5 890 374 — 
Fair value hedges   
Interest rate contracts23,893 544 274 21,985 41 758 
Cross-currency interest rate swap contracts
885 — 49 885 — 79 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts28,463 281 198 25,535 177 294 
Cross-currency interest rate swap contracts
6,533 117 61 6,520 51 276 
Interest rate contracts50,060 338 126 49,854 496 195 
Commodity contracts997 54 11 823 163 11 
Total derivative financial instruments, gross (a) (b)
$123,296 $1,590 $1,070 $116,851 $1,315 $1,949 
Current portion
$924 $535 $837 $753 
Non-current portion
666 535 478 1,196 
Total derivative financial instruments, gross
$1,590 $1,070 $1,315 $1,949 
__________
(a)At December 31, 2021 and March 31, 2022, we held collateral of $26 million and $102 million, respectively, and we posted collateral of $71 million and $109 million, respectively.
(b)At December 31, 2021 and March 31, 2022, the fair value of assets and liabilities available for counterparty netting was $719 million and $429 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.