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Derivatives (Tables)
6 Months Ended
Jun. 30, 2020
Derivatives  
Gain (loss) on derivative instruments designated as cash flow hedges

Pretax Gain (Loss)

 

Recognized in Other

Pretax Gain (Loss) Reclassified

 

Comprehensive

from Accumulated Other

 

Income on Derivative

Comprehensive Income into Income

 

Three months ended June 30, 2020 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

$

(15)

 

Cost of sales

$

33

Interest rate contracts

 

 

Interest expense

 

(2)

Total

$

(15)

$

31

Six months ended June 30, 2020 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

$

64

 

Cost of sales

$

51

Interest rate contracts

 

(2)

 

Interest expense

 

(4)

Total

$

62

$

47

Three months ended June 30, 2019 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

$

2

 

Cost of sales

$

21

Interest rate contracts

 

(32)

 

Interest expense

 

(1)

Total

$

(30)

$

20

Six months ended June 30, 2019 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

$

32

 

Cost of sales

$

28

Interest rate contracts

 

(49)

 

Interest expense

 

(1)

Total

$

(17)

$

27

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

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

    

June 30, 2020

    

December 31, 2019

    

June 30, 2020

    

December 31, 2019

 

Short-term borrowings and current portion of long-term debt

 

$

500

$

499

 

$

1

$

Long-term debt

776

775

21

22

Total

$

1,276

$

1,274

$

22

$

22

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

 

Pretax Gain (Loss)

 

Recognized as

 

Cumulative Translation

Amount of Gain (Loss) Excluded

 

within Other

from Effectiveness Testing

 

Comprehensive Income

Recognized in Income

 

Three months ended June 30, 2020 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

$

(11)

 

Cost of sales

$

Foreign currency forward contracts

 

4

 

Cost of sales

 

Total

$

(7)

$

Six months ended June 30, 2020 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

$

4

 

Cost of sales

$

Foreign currency forward contracts

 

5

 

Cost of sales

 

5

Total

$

9

$

5

Three months ended June 30, 2019 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

$

(64)

 

Cost of sales

$

Foreign currency forward contracts

(10)

Cost of sales

7

Total

$

(74)

$

7

Six months ended June 30, 2019 (Millions)

    

Amount

    

Location

    

Amount

 

Foreign currency denominated debt

$

28

 

Cost of sales

$

Foreign currency forward contracts

5

Cost of sales

12

Total

$

33

$

12

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

Three months ended June 30, 2020

Six months ended June 30, 2020

 

Gain (Loss) on Derivative Recognized in

Gain (Loss) on Derivative Recognized in

 

Income

Income

 

(Millions)

    

Location

    

Amount

    

Location

    

Amount

 

Foreign currency forward/option contracts

 

Cost of sales

$

(2)

 

Cost of sales

$

2

Foreign currency forward contracts

 

Interest expense

 

(11)

 

Interest expense

 

(27)

Total

$

(13)

$

(25)

Three months ended June 30, 2019

Six months ended June 30, 2019

Gain (Loss) on Derivative Recognized in

Gain (Loss) on Derivative Recognized in

Income

Income

(Millions)

    

Location

    

Amount

    

Location

    

Amount

Foreign currency forward/option contracts

 

Cost of sales

$

 

Cost of sales

$

(2)

Foreign currency forward contracts

 

Interest expense

 

(10)

 

Interest expense

 

(18)

Total

$

(10)

$

(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

Location and Amount of Gain (Loss) Recognized in Income

Three months ended June 30, 2020

Six months ended June 30, 2020

(Millions)

Cost of sales

Other expense
(income), net

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

$

3,805

$

111

$

7,914

$

207

The effects of cash flow and fair value 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

$

33

$

$

51

$

Interest rate contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income

(2)

(4)

Gain or (loss) on fair value hedging relationships:

Interest rate contracts:

Hedged items

$

$

2

$

$

Derivatives designated as hedging instruments

(2)

Location and Amount of Gain (Loss) Recognized in Income

Location and Amount of Gain (Loss) Recognized in Income

Three months ended June 30, 2019

Six months ended June 30, 2019

(Millions)

Cost of sales

Other expense
(income), net

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

$

4,313

$

256

$

8,623

$

304

The effects of cash flow and fair value 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

$

21

$

$

28

$

Interest rate contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income

(1)

(1)

Gain or (loss) on fair value hedging relationships:

Interest rate contracts:

Hedged items

$

$

(7)

$

$

(12)

Derivatives designated as hedging instruments

7

12

Location and Fair Value of Derivative Instruments

Gross

    

Assets

    

Liabilities

 

Notional

Fair

Fair

 

June 30, 2020 (Millions)

Amount

Location

Value Amount

Location

Value Amount

 

Derivatives designated as

hedging instruments

Foreign currency forward/option contracts

$

1,715

 

Other current assets

$

73

 

Other current liabilities

$

5

Foreign currency forward/option contracts

 

828

 

Other assets

 

46

 

Other liabilities

 

2

Interest rate contracts

 

500

 

Other current assets

 

 

Other current liabilities

 

Interest rate contracts

 

603

 

Other assets

 

16

 

Other liabilities

 

Total derivatives designated as hedging instruments

$

135

$

7

Derivatives not designated as

hedging instruments

Foreign currency forward/option contracts

$

3,530

 

Other current assets

$

14

 

Other current liabilities

$

25

Total derivatives not designated as hedging instruments

$

14

$

25

Total derivative instruments

$

149

$

32

Gross

    

Assets

    

Liabilities

 

Notional

Fair

Fair

 

December 31, 2019 (Millions)

Amount

Location

Value Amount

Location

Value Amount

 

Derivatives designated as

hedging instruments

Foreign currency forward/option contracts

$

1,995

 

Other current assets

$

64

 

Other current liabilities

$

9

Foreign currency forward/option contracts

1,041

Other assets

50

Other liabilities

3

Interest rate contracts

 

500

 

Other current assets

 

 

Other current liabilities

 

Interest rate contracts

 

603

 

Other assets

 

17

 

Other liabilities

 

Total derivatives designated as hedging instruments

$

131

$

12

Derivatives not designated as

hedging instruments

Foreign currency forward/option contracts

$

2,684

 

Other current assets

$

11

 

Other current liabilities

$

8

Total derivatives not designated as hedging instruments

$

11

$

8

Total derivative instruments

$

142

$

20

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

Cash

 

Consolidated

Recognized

Collateral

Net Amount of

 

June 30, 2020 (Millions)

Balance Sheet

Derivative Liabilities

Received

Derivative Assets

 

Derivatives subject to master netting agreements

$

149

$

13

$

$

136

Derivatives not subject to master netting agreements

 

 

Total

$

149

$

136

December 31, 2019 (Millions)

Derivatives subject to master netting agreements

$

142

$

14

$

$

128

Derivatives not subject to master netting agreements

 

 

Total

$

142

$

128

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

Cash

Net Amount of

 

Consolidated

Recognized

Collateral

Derivative

 

June 30, 2020 (Millions)

Balance Sheet

Derivative Assets

Pledged

Liabilities

 

Derivatives subject to master netting agreements

$

32

$

13

$

$

19

Derivatives not subject to master netting agreements

 

 

Total

$

32

$

19

December 31, 2019 (Millions)

 

Derivatives subject to master netting agreements

$

20

$

14

$

$

6

Derivatives not subject to master netting agreements

 

 

Total

$

20

$

6