Financial Instruments

Cash Equivalents

The fair value of cash equivalents approximates its stated value. The estimated fair value of the company's cash equivalents was determined using level 1 and level 2 inputs within the fair value hierarchy, as described in the company's 2014 Annual Report in Note 1, “Summary of Significant Accounting Policies.” Level 1 measurements are based on observable net asset values and level 2 measurements are based on current interest rates for similar investments with comparable credit risk and time to maturity. The company held $0 and $1,436 of money market funds (level 1 measurements) as of September 30, 2015 and December 31, 2014, respectively. The company held $1,680 and $3,293 of other cash equivalents (level 2 measurements) as of September 30, 2015 and December 31, 2014, respectively.

Marketable Securities

Marketable securities represent investments in fixed and floating rate financial instruments with maturities greater than three months and up to twelve months at time of purchase. Investments classified as held-to-maturity are recorded at amortized cost. The carrying value approximates fair value due to the short-term nature of the investment. Investments classified as available-for-sale are carried at estimated fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive loss. The company held $381 and $124 of held-to-maturity and $25 and $0 of available-for-sale securities as of September 30, 2015 and December 31, 2014, respectively.

Debt

The estimated fair value of the company's total debt, including interest rate financial instruments, was determined using level 2 inputs within the fair value hierarchy, as described in the company's 2014 Annual Report in Note 1, “Summary of Significant Accounting Policies.” Based on quoted market prices for the same or similar issues or on current rates offered to the company for debt of the same remaining maturities, the fair value of the company's debt was approximately $10,430 and $11,394 as of September 30, 2015 and December 31, 2014, respectively.

Derivative Instruments

Objectives and Strategies for Holding Derivative Instruments

In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk.

Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps. The company has not designated any nonderivatives as hedging instruments.

The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties to limit its exposure to credit losses. The company's derivative assets and liabilities are reported on a gross basis in the Condensed Consolidated Balance Sheets. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management.

The notional amounts of the company's derivative instruments were as follows:



	September 30, 2015		December 31, 2014
Derivatives designated as hedging instruments:
Interest rate swaps	$	—	$	1,000
Foreign currency contracts	10		434
Commodity contracts	78		388
Derivatives not designated as hedging instruments:
Foreign currency contracts	7,819		10,586
Commodity contracts	15		166

Foreign Currency Risk

The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments and cash flows.

The company routinely uses forward exchange and option contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities of its operations. The primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, net of related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates.

Commodity Price Risk

Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn, soybeans and soybean meal. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with agricultural commodity exposures.

Cash Flow Hedges

Foreign Currency Contracts

The company uses foreign currency exchange instruments such as forwards and options to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. In addition, the company occasionally uses forward exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated transactions such as capital expenditures.

Commodity Contracts

The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures and swaps, to hedge the commodity price risk associated with agriculture commodity exposures.

While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring. The following table summarizes the after-tax effect of cash flow hedges on accumulated other comprehensive loss for the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Beginning balance	$	(10	)	$	(13	)	$	(6	)	$	(48	)
Additions and revaluations of derivatives designated as cash flow hedges	(13		)	(1		)	(24		)	15
Clearance of hedge results to earnings	—			(1		)	7			18
Ending balance	$	(23	)	$	(15	)	$	(23	)	$	(15	)

At September 30, 2015, an after-tax net loss of $9 is expected to be reclassified from accumulated other comprehensive loss into earnings over the next 12 months.

Derivatives not Designated in Hedging Relationships

Foreign Currency Contracts

The company routinely uses forward exchange and options contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues.

Commodity Contracts

The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn, soybeans and soybean meal.

Fair Values of Derivative Instruments

The table below presents the fair values of the company's derivative assets and liabilities within the fair value hierarchy, as described in the company's 2014 Annual Report in Note 1, “Summary of Significant Accounting Policies.”



		Fair Value Using Level 2 Inputs
	Balance Sheet Location	September 30, 2015		December 31, 2014
Asset derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps¹	Accounts and notes receivable, net	$	—	$	1
Foreign currency contracts	Accounts and notes receivable, net	—		10
		—		11
Derivatives not designated as hedging instruments:
Foreign currency contracts²	Accounts and notes receivable, net	132		254

Total asset derivatives³		$	132	$	265
Cash collateral^1,2	Other accrued liabilities	$	20	$	47

Liability derivatives:
Derivatives designated as hedging instruments:
Foreign currency contracts	Other accrued liabilities	$	—	$	10

Derivatives not designated as hedging instruments:
Foreign currency contracts	Other accrued liabilities	63		62
Commodity contracts	Other accrued liabilities	1		1
		64		63
Total liability derivatives³		$	64	$	73


¹	Cash collateral held as of September 30, 2015 and December 31, 2014 represents $0 and $6, respectively, related to interest rate swap derivatives designated as hedging instruments.


²	Cash collateral held as of September 30, 2015 and December 31, 2014 represents $20 and $41, respectively, related to foreign currency derivatives not designated as hedging instruments.


³	The company's derivative assets and liabilities subject to enforceable master netting arrangements totaled $51 at September 30, 2015 and $67 at December 31, 2014.

Effect of Derivative Instruments



	Amount of Gain (Loss) Recognized in OCI¹ (Effective Portion)						Amount of Gain (Loss) Recognized in Income²
Three Months Ended September 30,	2015			2014			2015			2014			Income Statement Classification
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps	$	—		$	—		$	—		$	(7	)	Interest expense
Cash flow hedges:
Foreign currency contracts	—			20			—			2			Net sales
Commodity contracts	(22		)	(23		)	—			—			Cost of goods sold
	(22		)	(3		)	—			(5		)
Derivatives not designated as hedging instruments:
Foreign currency contracts	—			—			174			403			Other income, net³
Commodity contracts	—			—			(2		)	4			Cost of goods sold
	—			—			172			407
Total derivatives	$	(22	)	$	(3	)	$	172		$	402



	Amount of Gain (Loss) Recognized in OCI¹ (Effective Portion)					Amount of Gain (Loss) Recognized in Income²
Nine Months Ended September 30,	2015			2014		2015			2014			Income Statement Classification
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps	$	—		$	—	$	(1	)	$	(20	)	Interest expense
Cash flow hedges:
Foreign currency contracts	(1		)	19		10			—			Net sales
Commodity contracts	(35		)	4		(22		)	(29		)	Cost of goods sold
	(36		)	23		(13		)	(49		)
Derivatives not designated as hedging instruments:
Foreign currency contracts	—			—		435			287			Other income, net³
Foreign currency contracts	—			—		(3		)	—			Net sales
Commodity contracts	—			—		3			(21		)	Cost of goods sold
	—			—		435			266
Total derivatives	$	(36	)	$	23	$	422		$	217


¹	OCI is defined as other comprehensive income (loss).


²	For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from accumulated OCI into income during the period. For the three and nine months ended September 30, 2015 and 2014, there was no material ineffectiveness with regard to the company's cash flow hedges.

Gain (loss) recognized in other income, net, was partially offset by the related gain (loss) on the foreign currency-denominated monetary assets and liabilities of the company's operations, which were $(210) and $(153) for the three months ended September 30, 2015 and 2014, respectively, and $(381) and $(243) for the nine months ended September 30, 2015 and 2014, respectively. See Note 4 for additional information.