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Financial Instruments: (Tables)

9 Months Ended

Sep. 30, 2013

Financial assets and financial liabilities measured at fair value on a recurring basis

(Dollars in millions)
At September 30, 2013				Level 1		Level 2		Level 3		Total
Assets:
	Cash equivalents(1)
		Time deposits and certificates of deposit	$	—	$	4,422	$	—	$	4,422
		Commercial paper		—		992		—		992
		Money market funds		1,713		—		—		1,713
		U.S. government securities		—		800		—		800
		Other securities		—		10		—		10
	Total			1,713		6,225		—		7,938	(6)
	Debt securities - current (2)			—		160				160	(6)
	Debt securities - noncurrent (3)			1		8		—		9
	Available-for-sale equity investments (3)			32		—		—		32
	Derivative assets (4)
		Interest rate contracts		—		412		—		412
		Foreign exchange contracts		—		371		—		371
		Equity contracts		—		9		—		9
	Total			—		793		—		793	(7)
Total assets			$	1,747	$	7,185	$	—	$	8,932	(7)
Liabilities:
	Derivative liabilities (5)
		Foreign exchange contracts	$	—	$	575	$	—	$	575
		Equity contracts		—		7		—		7
Total liabilities			$	—	$	581	$	—	$	581	(7)

(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position.

(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of

Financial Position.

(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments

and sundry assets in the Consolidated Statement of Financial Position at September 30, 2013 were $396 million and

$397 million, respectively.

(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other

liabilities in the Consolidated Statement of Financial Position at September 30, 2013 were $432 million and $150

million, respectively.

(6) Available-for-sale securities with carrying values that approximate fair value.

(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated

Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $343

million each

(Dollars in millions)
At December 31, 2012				Level 1		Level 2		Level 3		Total
Assets:
	Cash equivalents(1)
		Time deposits and certificates of deposit	$	—	$	3,694	$	—	$	3,694
		Commercial paper		—		2,098		—		2,098
		Money market funds		1,923		—		—		1,923
		Other securities		—		30		—		30
	Total			1,923		5,823		—		7,746	(6)
	Debt securities - current (2)			—		717		—		717	(6)
	Debt securities - noncurrent (3)			2		8		—		10
	Available-for-sale equity investments (3)			34		—		—		34
	Derivative assets (4)
		Interest rate contracts		—		604		—		604
		Foreign exchange contracts		—		305		—		305
		Equity contracts		—		9		—		9
	Total			—		918		—		918	(7)
Total assets			$	1,959	$	7,466	$	—	$	9,424	(7)
Liabilities:
	Derivative liabilities (5)
		Foreign exchange contracts	$	—	$	496	$	—	$	496
		Equity contracts		—		7		—		7
Total liabilities			$	—	$	503	$	—	$	503	(7)

(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position.

(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of

Financial Position.

(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments

and sundry assets in the Consolidated Statement of Financial Position at December 31, 2012 were $333 million and

$585 million, respectively.

(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other

liabilities in the Consolidated Statement of Financial Position at December 31, 2012 were $426 million and $78

million, respectively.

(6) Available-for-sale securities with carrying values that approximate fair value.

(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated

Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $262

million each.

Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value

			Gross		Gross
(Dollars in millions)	Adjusted		Unrealized		Unrealized		Fair
At September 30, 2013:	Cost		Gains		Losses		Value
Debt securities – noncurrent(1)	$	7	$	2	$	—	$	9
Available-for-sale equity investments(1)	$	29	$	4	$	1	$	32

(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

			Gross		Gross
(Dollars in millions)	Adjusted		Unrealized		Unrealized		Fair
At December 31, 2012:	Cost		Gains		Losses		Value
Debt securities – noncurrent(1)	$	8	$	2	$	—	$	10
Available-for-sale equity investments(1)	$	31	$	4	$	1	$	34

(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

Sales of debt and available-for-sale equity investments

(Dollars in millions)
For the three months ended September 30:		2013		2012
Proceeds	$	8	$	36
Gross realized gains (before taxes)		5		27
Gross realized losses (before taxes)		0		—

(Dollars in millions)
For the nine months ended September 30:		2013		2012
Proceeds	$	28	$	87
Gross realized gains (before taxes)		9		43
Gross realized losses (before taxes)		4		0

Unrealized gains/(losses) on available-for-sale debt and equity securities

(Dollars in millions)
For the three months ended September 30:	2013		2012
Net unrealized gains/(losses) arising during the period	$	3	$	2
Net unrealized (gains)/losses reclassified to net income*		(3)		(17)

*There were no writedowns for the three months ended September 30, 2013 and 2012, respectively.

(Dollars in millions)
For the nine months ended September 30:	2013		2012
Net unrealized gains/(losses) arising during the period	$	2	$	20
Net unrealized (gains)/losses reclassified to net income*		(3)		(26)

* There were no significant writedowns for the nine months ended September 30, 2013 and 2012, respectively.

Fair Value of Derivative Instruments in the Consolidated Statement of Financial Position

Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position
As of September 30, 2013 and December 31, 2012

(Dollars in millions)	Fair Value of Derivative Assets					Fair Value of Derivative Liabilities
	Balance Sheet					Balance Sheet
	Classification	9/30/2013		12/31/2012		Classification	9/30/2013		12/31/2012
Designated as hedging
instruments:
Interest rate contracts:	Prepaid expenses and					Other accrued
	other current assets	$	41	$	47	expenses and liabilities	$	—	$	—
	Investments and sundry
	assets		371		557	Other liabilities		—		—
Foreign exchange	Prepaid expenses and					Other accrued
contracts:	other current assets		138		135	expenses and liabilities		378		267
	Investments and sundry
	assets		—		5	Other liabilities		150		78

Fair value of derivative						Fair value of derivative
assets		$	550	$	744	liabilities	$	528	$	345

Not designated as
hedging instruments:
Foreign exchange	Prepaid expenses and					Other accrued
contracts:	other current assets	$	208	$	142	expenses and liabilities	$	47	$	152
	Investments and sundry
	assets		25		23	Other liabilities		—		—
Equity contracts:	Prepaid expenses and					Other accrued
	other current assets		9		9	expenses and liabilities		7		7
Fair value of derivative						Fair value of derivative
assets		$	242	$	174	liabilities	$	53	$	159

Total debt designated as
hedging instruments:
	Short-term debt		N/A		N/A		$	1,219	$	578
	Long-term debt		N/A		N/A			2,297		3,035


Total		$	793	$	918		$	4,097	$	4,116

N/A-not applicable

Effect of Derivative Instruments in the Consolidated Statement of Earnings


The Effect of Derivative Instruments in the Consolidated Statement of Earnings
For the three months ended September 30, 2013 and 2012

(Dollars in millions)		Gain (Loss) Recognized in Earnings
		Consolidated
		Statement of	Recognized on				Attributable to Risk
		Earnings Line Item	Derivatives(1)				Being Hedged(2)
For the three months ended September 30:				2013		2012		2013		2012
Derivative instruments in fair value hedges:
Interest rate contracts		Cost of financing	$	5	$	13	$	19	$	19
		Interest expense		3		11		12		16
Derivative instruments not designated as
	hedging instruments(1):
Foreign exchange contracts		Other (income)
		and expense		254		148		N/A		N/A
Equity contracts		SG&A expense		46		54		N/A		N/A

Total			$	308	$	226	$	31	$	35


		Gain (Loss) Recognized in Earnings and Other Comprehensive Income
						Consolidated					(Ineffectiveness) and
		Effective Portion				Statement of	Effective Portion Reclassified				Amounts Excluded from
		Recognized in OCI				Earnings Line Item	from AOCI				Effectiveness Testing(3)
For the three months
	ended September 30:	2013		2012			2013		2012		2013		2012
Derivative instruments
	in cash flow hedges:
Interest rate contracts		$	—	$	—	Interest expense	$	—	$	(2)	$	—	$	—
						Other (income)
Foreign exchange			(409)		(54)	and expense		30		102		0		0
	contracts					Cost of sales		(17)		6		—		—
						SG&A expense		13		5		—		—
Instruments in net
	investment hedges(4):
Foreign exchange
	contracts		(223)		(136)	Interest expense		—		—		1		6

Total		$	(632)	$	(190)		$	27	$	112	$	1	$	6

N/A-not applicable

Note: AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity.

The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
The amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships.
Instruments in net investment hedges include derivative and non-derivative instruments


The Effect of Derivative Instruments in the Consolidated Statement of Earnings
For the nine months ended September 30, 2013 and 2012

(Dollars in millions)		Gain (Loss) Recognized in Earnings
		Consolidated
		Statement of	Recognized on				Attributable to Risk
		Earnings Line Item	Derivatives(1)				Being Hedged(2)
For the nine months ended September 30:				2013		2012		2013		2012
Derivative instruments in fair value hedges:
Interest rate contracts		Cost of financing	$	(82)	$	68	$	156	$	27
		Interest expense		(53)		58		101		23
Derivative instruments not designated as
	hedging instruments(1):
Foreign exchange contracts		Other (income)
		and expense		(265)		(56)		N/A		N/A
Equity contracts		SG&A expense		105		116		N/A		N/A

Total			$	(295)	$	186	$	257	$	50


		Gain (Loss) Recognized in Earnings and Other Comprehensive Income
						Consolidated					(Ineffectiveness) and
		Effective Portion				Statement of	Effective Portion Reclassified				Amounts Excluded from
		Recognized in OCI				Earnings Line Item	from AOCI				Effectiveness Testing(3)
For the nine months
	ended September 30:	2013		2012			2013		2012		2013		2012
Derivative instruments
	in cash flow hedges:
Interest rate contracts		$	—	$	—	Interest expense	$	—	$	(6)	$	—	$	—
						Other (income)
Foreign exchange			(59)		65	and expense		115		209		(0)		3
	contracts					Cost of sales		(15)		22		—		—
						SG&A expense		29		21		—		—
Instruments in net
	investment hedges(4):
Foreign exchange
	contracts		58		(23)	Interest expense		—		—		3		9

Total		$	(1)	$	42		$	129	$	246	$	3	$	12

N/A-not applicable

Note: AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity.

The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
The amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships.
Instruments in net investment hedges include derivative and non-derivative instruments.

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the realized and unrealized gains and losses reported in the statement of income which have resulted from the sale and holding of marketable securities, respectively, as well as the sale or disposal of cost method investments. Such amounts would include realized gains and losses on the sale or disposal of trading, available-for-sale, and held-to-maturity securities, unrealized gains and losses on trading securities, unrealized gains and losses on available-for-sale and held-to-maturity securities transferred to the trading securities category, realized gains and losses on the sale or disposal of cost method investments, and losses recognized for other than temporary impairments (OTTI) of such investments.

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