Derivatives (Tables)

3 Months Ended

Mar. 31, 2019

Gain (loss) on derivative instruments designated as cash flow hedges


	Pretax Gain (Loss)
	Recognized in Other		Pretax Gain (Loss) Reclassified
	Comprehensive		from Accumulated Other
Three months ended March 31, 2019	Income on Derivative		Comprehensive Income into Income
(Millions)	Amount		Location	Amount
Foreign currency forward/option contracts	$	30	Cost of sales	$	7
Interest rate swap contracts		(17)	Interest expense		—
Total	$	13		$	7

Pretax Gain (Loss) Recognized in

Pretax Gain (Loss)

Income on Effective Portion of

Ineffective Portion of Gain

Recognized in Other

Derivative as a Result of

(Loss) on Derivative and

Comprehensive

Reclassification from

Amount Excluded from

Income on Effective

Accumulated Other

Effectiveness Testing

Three months ended March 31, 2018

Portion of Derivative

Comprehensive Income

Recognized in Income

(Millions)

Amount

Location

Amount

Location

Amount

Foreign currency forward/option contracts

(79)

Cost of sales

(34)

Cost of sales

—

Interest rate swap contracts

(3)

Interest expense

—

Interest expense

—

Total

(82)

(34)

—

Gain (loss) on derivative instruments designated as fair value hedges


	Gain (Loss) on Derivative			Gain (Loss) on Hedged Item
Three months ended March 31, 2018	Recognized in Income			Recognized in Income
(Millions)	Location	Amount		Location	Amount
Interest rate swap contracts	Interest expense	$	(11)	Interest expense	$	11
Total		$	(11)		$	11

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:


					Cumulative Amount of Fair Value Hedging
	Carrying Value of the				Adjustment Included in the Carrying Value
	Hedged Liabilities (in millions)				of the Hedged Liabilities (in millions)
Location on the Consolidated Balance Sheet	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Short-term borrowings and current portion of long-term debt	$	598	$	596	$	(1)	$	(4)
Long-term debt		1,272		1,276		20		18
Total	$	1,870	$	1,872	$	19	$	14

Gain (loss) on derivative and non-derivative instruments designated as net investment hedges




	Pretax Gain (Loss)
	Recognized as
	Cumulative Translation		Amount Excluded
	within Other		from Effectiveness Testing
Three months ended March 31, 2019	Comprehensive Income		Recognized in Income
(Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	92	Cost of sales	$	—
Foreign currency forward contracts		15	Cost of sales		5
Total	$	107		$	5


	Pretax Gain (Loss)
	Recognized as
	Cumulative Translation
	within Other		Ineffective Portion of Gain (Loss) on
	Comprehensive Income		Instrument and Amount Excluded
	on Effective Portion of		from Effectiveness Testing
Three months ended March 31, 2018	Instrument		Recognized in Income
(Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	(128)	Cost of sales	$	(2)
Foreign currency forward contracts		(6)	Cost of sales		(1)
Total	$	(134)		$	(3)

Gain (loss) on derivative instruments not designated as hedging instruments


	Three months ended March 31, 2019
	Gain (Loss) on Derivative Recognized in
	Income
(Millions)	Location	Amount
Foreign currency forward/option contracts	Cost of sales	$	(2)
Foreign currency forward contracts	Interest expense		(8)
Total		$	(10)


	Three months ended March 31, 2018
	Gain (Loss) on Derivative Recognized in
	Income
(Millions)	Location	Amount
Foreign currency forward/option contracts	Cost of sales	$	(3)
Foreign currency forward contracts	Interest expense		23
Total		$	20

Location in consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in cash flow or fair value hedging relationship


	Location and Amount of Gain (Loss) Recognized in Income
	Three months ended March 31, 2019
(Millions)	Cost of sales		Other expense (income), net
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded	$	4,310	$	48

The effects of fair value and cash flow hedging:
Gain or (loss) on cash flow hedging relationships:
Foreign currency forward/option contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	7	$	—
Interest rate swap contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income		—		—

Gain or (loss) on fair value hedging relationships:
Interest rate swap contracts:
Hedged items	$	—	$	(5)
Derivatives designated as hedging instruments		—		5

Location and Fair Value of Derivative Instruments


	Gross		Assets			Liabilities
March 31, 2019	Notional			Fair			Fair
(Millions)	Amount		Location	Value Amount		Location	Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts	$	2,742	Other current assets	$	88	Other current liabilities	$	11
Foreign currency forward/option contracts		1,100	Other assets		53	Other liabilities		1
Interest rate swap contracts		600	Other current assets		—	Other current liabilities		1
Interest rate swap contracts		1,453	Other assets		19	Other liabilities		31
Total derivatives designated as hedging instruments				$	160		$	44

Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts	$	2,925	Other current assets	$	11	Other current liabilities	$	12
Total derivatives not designated as hedging instruments				$	11		$	12

Total derivative instruments				$	171		$	56


	Gross		Assets			Liabilities
December 31, 2018	Notional			Fair			Fair
(Millions)	Amount		Location	Value Amount		Location	Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts	$	2,277	Other current assets	$	74	Other current liabilities	$	12
Foreign currency forward/option contracts		1,099	Other assets		39	Other liabilities		4
Interest rate swap contracts		1,000	Other current assets		—	Other current liabilities		14
Interest rate swap contracts		1,403	Other assets		19	Other liabilities		17
Total derivatives designated as hedging instruments				$	132		$	47

Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts	$	2,484	Other current assets	$	14	Other current liabilities	$	6
Total derivatives not designated as hedging instruments				$	14		$	6

Total derivative instruments				$	146		$	53

Offsetting Assets

Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties


			Gross Amounts not Offset in the
			Consolidated Balance Sheet that are Subject
	Gross Amount of		to Master Netting Agreements
	Derivative Assets		Gross Amount of
	Presented in the		Eligible Offsetting
March 31, 2019	Consolidated		Recognized		Cash Collateral		Net Amount of
(Millions)	Balance Sheet		Derivative Liabilities		Received		Derivative Assets
Derivatives subject to master netting agreements	$	171	$	39	$	—	$	132
Derivatives not subject to master netting agreements		—						—
Total	$	171					$	132


December 31, 2018
(Millions)
Derivatives subject to master netting agreements	$	146	$	38	$	—	$	108
Derivatives not subject to master netting agreements		—						—
Total	$	146					$	108

Offsetting Liabilities

Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties


			Gross Amounts not Offset in the
			Consolidated Balance Sheet that are Subject
	Gross Amount of		to Master Netting Agreements
	Derivative Liabilities		Gross Amount of
	Presented in the		Eligible Offsetting
March 31, 2019	Consolidated		Recognized		Cash Collateral		Net Amount of
(Millions)	Balance Sheet		Derivative Assets		Pledged		Derivative Liabilities
Derivatives subject to master netting agreements	$	56	$	39	$	—	$	17
Derivatives not subject to master netting agreements		—						—
Total	$	56					$	17


December 31, 2018
(Millions)
Derivatives subject to master netting agreements	$	53	$	38	$	—	$	15
Derivatives not subject to master netting agreements		—						—
Total	$	53					$	15