DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2016

Summary of Activity Relating to Securitization Arrangement

The following is a summary of the activity relating to the company’s securitization arrangement in Japan.


	Three months ended March 31,
(in millions)	2016			2015
Sold receivables at beginning of period		$ 81			$ 104
Proceeds from sales of receivables		104			113
Cash collections (remitted to the owners of the receivables)		(107	)		(120	)
Effect of currency exchange rate changes		7			(1	)
Sold receivables at end of period		$ 85			$ 96

Summary of Gains and Losses on Derivative Instruments

The following tables summarize the income statement locations and gains and losses on the company’s derivative instruments for the three months ended March 31, 2016 and 2015.


	Gain (loss) recognized in OCI						Location of gain (loss) in income statement		Gain (loss) reclassified from AOCI into income
(in millions)	2016			2015			Location of gain (loss) in income statement		2016		2015
Cash flow hedges
Interest rate contracts		$—			$—			Other income, net		$ 4		$—
Foreign exchange contracts		—			(1	)		Net sales		—		—
Foreign exchange contracts		(4	)		64			Cost of sales		1		25
Total		$(4	)		$63					$ 5		$25


			Gain (loss) recognized in income
(in millions)	Location of gain (loss) in income statement		2016		2015
Fair value hedges
Interest rate contracts		Net interest expense		$22		$ 47
Undesignated derivative instruments
Foreign exchange contracts		Other income, net		$ 6		$ (8	)

Classification and Fair Value Amounts of Derivative Instruments

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2016.

Derivatives in asset positions

Derivatives in liability positions

(in millions)

Balance sheet location

Fair value

Balance sheet location

Fair value

Derivative instruments designated as hedges

Interest rate contracts

Other long-term assets

$ 33

Other long-term liabilities

$—

Foreign exchange contracts

Prepaid expenses and other

Accounts payable and
accrued liabilities

Foreign exchange contracts

Other long-term assets

—

Other long-term liabilities

—

Total derivative instruments designated as hedges

$ 42

$ 1

Undesignated derivative instruments

Foreign exchange contracts

Prepaid expenses and other

$ —

Accounts payable and
accrued liabilities

$ 2

Total derivative instruments

$ 42

$ 3

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2015.

Derivatives in asset positions

Derivatives in liability positions

(in millions)

Balance sheet location

Fair value

Balance sheet location

Fair value

Derivative instruments designated as hedges

Interest rate contracts

Prepaid expenses and other

$ —

Accounts payable and
accrued liabilities

$ —

Interest rate contracts

Other long-term assets

Other long-term liabilities

—

Foreign exchange contracts

Prepaid expenses and other

Accounts payable and
accrued liabilities

Total derivative instruments designated as hedges

$ 55

$ 1

Undesignated derivative instruments

Foreign exchange contracts

Prepaid expenses and other

$ 1

Accounts payable and
accrued liabilities

$ 1

Total derivative instruments

$ 56

$ 2

Derivative Positions Presented on Net Basis

The following table provides information on the company’s derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.


	March 31, 2016						December 31, 2015
(in millions)	Asset			Liability			Asset			Liability
Gross amounts recognized in the consolidated balance sheet		$42			$ 3			$56			$ 2
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet		(3	)		(3	)		(2	)		(2	)
Total		$39			$—			$54			$—

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the condensed consolidated balance sheets.


			Basis of fair value measurement
(in millions)	Balance as of March 31, 2016		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign currency hedges		$ 9		$—		$ 9		$—
Interest rate hedges		33		—		33		—
Available-for-sale securities		1,242		10		1,232		—
Total assets		$1,284		$10		$1,274		$—

Liabilities
Foreign currency hedges		$ 3		$—		$ 3		$—
Contingent payments related to acquisitions		20		—		—		20
Total liabilities		$ 23		$—		$ 3		$20


			Basis of fair value measurement
(in millions)	Balance as of December 31, 2015		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign currency hedges		$ 10		$—		$ 10		$—
Interest rate hedges		46		—		46		—
Available-for-sale securities		5,162		14		5,148		—
Total assets		$5,218		$14		$5,204		$—

Liabilities
Foreign currency hedges		$ 2		$—		$ 2		$—
Contingent payments related to acquisitions		20		—		—		20
Total liabilities		$ 22		$—		$ 2		$20

Investments in Available-For-Sale Equity Securities

The following table provides information relating to the company’s investments in available-for-sale equity securities.


(in millions)	Amortized cost		Unrealized gains		Unrealized losses		Fair value
March 31, 2016		$179		$1,065		$ 2		$1,242
December 31, 2015		$732		$4,430		$—		$5,162

Book Values and Fair Values of Financial Instruments

The following table provides the values recognized in the condensed consolidated balance sheets and the approximate fair values as of March 31, 2016 and December 31, 2015.


	Book values				Approximate fair values
(in millions)	2016		2015		2016		2015
Assets
Investments		$ 22		$ 21		$ 22		$ 21

Liabilities
Short-term debt		$ 817		$1,775		$ 817		$1,775
Current maturities of long-term debt and lease obligations		472		810		475		818
Long-term debt and lease obligations		2,068		3,922		2,232		4,077

Summarization of Bases Used to Measure Fair Value of Financial Instruments

The following tables summarize the bases used to measure the approximate fair value of the financial instruments as of March 31, 2016 and December 31, 2015.


			Basis of fair value measurement
(in millions)	Balance as of March 31, 2016		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Investments		$ 22		$—		$ 2		$20
Total assets		$ 22		$—		$ 2		$20

Liabilities
Short-term debt		$ 817		$—		$ 817		$—
Current maturities of long-term debt and lease obligations		475		—		475		—
Long-term debt and lease obligations		2,232		—		2,232		—
Total liabilities		$3,524		$—		$3,524		$—


			Basis of fair value measurement
(in millions)	Balance as of December 31, 2015		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Investments		$ 21		$—		$ 2		$19
Total assets		$ 21		$—		$ 2		$19

Liabilities
Short-term debt		$1,775		$—		$1,775		$—
Current maturities of long-term debt and lease obligations		818		—		818		—
Long-term debt and lease obligations		4,077		—		4,077		—
Total liabilities		$6,670		$—		$6,670		$—