Derivative Financial Instruments

9 Months Ended

Sep. 26, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments [Text Block]

NOTE 12 : DERIVATIVE FINANCIAL INSTRUMENTS

VOLUME OF DERIVATIVE ACTIVITY

Total gross notional amounts for outstanding derivatives (recorded at fair value) at the end of each period were as follows: 

(In Millions)	Sep 26, 2020		Dec 28, 2019
Foreign currency contracts	$	28,743	$	23,981
Interest rate contracts	14,410		14,302
Other	1,946		1,753
Total	$	45,099	$	40,036

FAIR VALUE OF DERIVATIVE INSTRUMENTS

	Sep 26, 2020				Dec 28, 2019
(In Millions)	Assets1		Liabilities2		Assets1		Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3	$	233	$	58	$	56	$	159
Interest rate contracts	1,677		—		690		9
Total derivatives designated as hedging instruments	1,910		58		746		168
Derivatives not designated as hedging instruments:
Foreign currency contracts3	76		381		179		78
Interest rate contracts	3		143		11		54
Equity contracts	15		52		50		3
Total derivatives not designated as hedging instruments	94		576		240		135
Total derivatives	$	2,004	$	634	$	986	$	303

¹Derivative assets are recorded as other assets, current and non-current.

²Derivative liabilities are recorded as other liabilities, current and non-current.

³The majority of these instruments mature within 12 months.

AMOUNTS OFFSET IN THE CONSOLIDATED CONDENSED BALANCE SHEETS

The gross amounts of our derivative instruments and reverse repurchase agreements subject to master netting arrangements with various counterparties, and cash and non-cash collateral posted under such agreements at the end of each period were as follows:

	Sep 26, 2020
							Gross Amounts Not Offset in the Balance Sheet
(In Millions)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments		Cash and Non-Cash Collateral Received or Pledged		Net Amount
Assets:
Derivative assets subject to master netting arrangements	$	1,996	$	—	$	1,996	$	(328)	$	(1,587)	$	81
Reverse repurchase agreements	1,250		—		1,250		—		(1,250)		—
Total assets	3,246		—		3,246		(328)		(2,837)		81
Liabilities:
Derivative liabilities subject to master netting arrangements	530		—		530		(328)		(202)		—
Total liabilities	$	530	$	—	$	530	$	(328)	$	(202)	$	—

	Dec 28, 2019
							Gross Amounts Not Offset in the Balance Sheet
(In Millions)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments		Cash and Non-Cash Collateral Received or Pledged		Net Amount
Assets:
Derivative assets subject to master netting arrangements	$	974	$	—	$	974	$	(144)	$	(808)	$	22
Reverse repurchase agreements	1,850		—		1,850		—		(1,850)		—
Total assets	2,824		—		2,824		(144)		(2,658)		22
Liabilities:
Derivative liabilities subject to master netting arrangements	262		—		262		(144)		(72)		46
Total liabilities	$	262	$	—	$	262	$	(144)	$	(72)	$	46

We obtain and secure available collateral from counterparties against obligations, including securities lending transactions and reverse repurchase agreements, when we deem it appropriate.

DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS

The before-tax net gains or losses attributed to cash flow hedges, recognized in other comprehensive income (loss), were $267 million net gains in the third quarter of 2020 and $286 million net gains in the first nine months of 2020 ($203 million net losses in the third quarter of 2019 and $52 million net losses in the first nine months of 2019). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.

During the first nine months of 2020 and 2019, the amounts excluded from effectiveness testing were insignificant.

DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS

The effects of derivative instruments designated as fair value hedges, recognized in interest and other, net for each period were as follows:

	Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives
	Three Months Ended				Nine Months Ended
(In Millions)	Sep 26, 2020		Sep 28, 2019		Sep 26, 2020		Sep 28, 2019
Interest rate contracts	$	(36)	$	273	$	996	$	1,312
Hedged items	36		(273)		(996)		(1,312)
Total	$	—	$	—	$	—	$	—

The amounts recorded on the Consolidated Condensed Balance Sheets related to cumulative basis adjustments for fair value hedges for each period were as follows:

Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Item Asset/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions)	Sep 26, 2020		Dec 28, 2019		Sep 26, 2020		Dec 28, 2019
Long-term debt	$	(13,674)	$	(12,678)	$	(1,677)	$	(681)

The total notional amount of pay-variable and receive-fixed interest rate swaps was $12.0 billion as of September 26, 2020 and as of December 28, 2019.

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The effects of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Income for each period were as follows:

		Three Months Ended				Nine Months Ended
(In Millions)	Location of Gains (Losses) Recognized in Income on Derivatives	Sep 26, 2020		Sep 28, 2019		Sep 26, 2020		Sep 28, 2019
Foreign currency contracts	Interest and other, net	$	(166)	$	150	$	(228)	$	187
Interest rate contracts	Interest and other, net	(3)		(12)		(94)		(51)
Other	Various	138		17		95		198
Total		$	(31)	$	155	$	(227)	$	334