Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2011

Fair value of derivatives segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments

Presented in the table below is the fair value of derivatives segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:


		September 30, 2011						December 31, 2010
		Fair Value of Derivative				U.S. Dollar		Fair Value of Derivative				U.S. Dollar
($ in millions)	Balance Sheet Caption	Asset		Liability		Notional		Asset		Liability		Notional

Derivatives Designated as Hedging Instruments

Foreign exchange contracts (current)	Deferred income taxes and other current assets	$	147	$	—	$	3,115	$	167	$	—	$	2,344
Foreign exchange contracts (non-current)	Other assets		364		—		4,723		310		—		3,720
Foreign exchange contracts (current)	Accrued and other current liabilities		—		121		2,390		—		18		1,505
Foreign exchange contracts (non-current)	Deferred income taxes and noncurrent liabilities		—		2		59		—		6		503
Interest rate swaps (current)	Deferred income taxes and other current assets		6		—		250		—		—		—
Interest rate swaps (non-current)	Other assets		—		—		—		56		—		1,000
Interest rate swaps (non-current)	Deferred income taxes and noncurrent liabilities		—		—		—		—		7		850

		$	517	$	123	$	10,537	$	533	$	31	$	9,922


Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts (current)	Deferred income taxes and other current assets	$	347	$	—	$	9,496	$	95	$	—	$	6,295

Foreign exchange contracts (current)	Accrued and other current liabilities		—		21		2,176		—		30		4,229

		$	347	$	21	$	11,672	$	95	$	30	$	10,524

		$	864	$	144	$	22,209	$	628	$	61	$	20,446

Location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a cash flow hedging relationship, (iii) designated in a foreign currency hedging relationship (net investment hedge) and (iv) not designated in a hedging relationship

The table below provides information on the location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a cash flow hedging relationship, (iii) designated in a foreign currency net investment hedging relationship and (iv) not designated in a hedging relationship:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
($ in millions)	2011			2010			2011			2010

Derivatives designated in fair value hedging relationships
Interest rate swap contracts
Amount of gain recognized in Other (income) expense, net on derivatives	$	(40	)	$	(29	)	$	(203	)	$	(64	)
Amount of loss recognized in Other (income) expense, net on hedged item		40			29			203			64

Derivatives designated in foreign currency cash flow hedging relationships
Foreign exchange contracts
Amount of loss (gain) reclassified from AOCI to Sales		30			(13	)		57			1
Amount of (gain) loss recognized in OCI on derivatives		(70	)		234			183			(50	)

Derivatives designated in foreign currency net investment hedging relationships
Foreign exchange contracts
Amount of gain recognized in Other (income) expense, net on derivatives ⁽¹⁾		(1	)		—			(9	)		—
Amount of loss recognized in OCI on derivatives		124			—			158			—

Derivatives not designated in a hedging relationship
Foreign exchange contracts
Amount of (gain) loss recognized in Other (income) expense, net on derivatives ⁽²⁾		(351	)		198			(31	)		13
Amount of loss (gain) recognized in Sales on hedged item		—			30			—			(83	)


⁽¹⁾		There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing.

⁽²⁾		These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

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

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:


	Fair Value Measurements Using								Fair Value Measurements Using
	Quoted Prices		Significant						Quoted Prices		Significant
	In Active		Other		Significant				In Active		Other		Significant
	Markets for		Observable		Unobservable				Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs				Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
($ in millions)	September 30, 2011								December 31, 2010

Assets
Investments
Corporate notes and bonds	$	—	$	1,554	$	—	$	1,554	$	—	$	1,133	$	—	$	1,133
Commercial paper		—		1,054		—		1,054		—		1,046		—		1,046
U.S. government and agency securities		—		605		—		605		—		500		—		500
Municipal securities		—		—		—		—		—		361		—		361
Asset-backed securities⁽¹⁾		—		173		—		173		—		171		—		171
Mortgage-backed securities⁽¹⁾		—		163		—		163		—		99		13		112
Foreign government bonds		—		51		—		51		—		10		—		10
Equity securities		94		49		—		143		117		23		—		140
Other debt securities		—		3		—		3		—		3		—		3

		94		3,652		—		3,746		117		3,346		13		3,476


Other assets
Securities held for employee compensation		184		—		—		184		181		—		—		181

Derivative assets ⁽²⁾
Purchased currency options		—		511		—		511		—		477		—		477
Forward exchange contracts		—		347		—		347		—		95		—		95
Interest rate swaps		—		6		—		6		—		56		—		56

		—		864		—		864		—		628		—		628

Total assets	$	278	$	4,516	$	—	$	4,794	$	298	$	3,974	$	13	$	4,285


Liabilities
Derivative liabilities ⁽²⁾
Written currency options	$	—	$	4	$	—	$	4	$	—	$	—	$	—	$	—
Forward exchange contracts		—		140		—		140		—		54		—		54
Interest rate swaps		—		—		—		—		—		7		—		7

Total liabilities	$	—	$	144	$	—	$	144	$	—	$	61	$	—	$	61


⁽¹⁾		Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by credit card, auto loan, and home equity receivables, with weighted-average lives of primarily 5 years or less. Mortgage-backed securities represent AAA-rated securities issued or unconditionally guaranteed as to payment of principal and interest by U.S. government agencies.

⁽²⁾		The fair value determination of derivatives includes an assessment of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

Changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The table below provides a summary of the changes in fair value of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
($ in millions)	2011		2010			2011			2010

Beginning balance	$	—	$	17		$	13		$	72
Sales		—		(2	)		(13	)		(63	)
Settlements		—		—			—			(2	)
Total realized and unrealized gains (losses)
Included in:
Earnings ⁽¹⁾		—		—			—			18
Comprehensive income		—		—			—			(10	)

Ending balance	$	—	$	15		$	—		$	15

Losses recorded in earnings for Level 3 assets still held at September 30	$	—	$	—		$	—		$	—


⁽¹⁾		Amounts are recorded in Other (income) expense, net.

Gross unrealized gains and losses on the Company's available-for-sale investments, including those pledged as collateral, recorded in Accumulated Other Comprehensive Income ("AOCI")

A summary of gross unrealized gains and losses on available-for-sale investments recorded in AOCI is as follows:


	September 30, 2011									December 31, 2010
	Fair		Amortized		Gross Unrealized					Fair		Amortized		Gross Unrealized
($ in millions)	Value		Cost		Gains		Losses			Value		Cost		Gains		Losses

Corporate notes and bonds	$	1,554	$	1,548	$	13	$	(7	)	$	1,133	$	1,124	$	12	$	(3	)
Commercial paper		1,054		1,054		—		—			1,046		1,046		—		—
U.S. government and agency securities		605		602		3		—			500		501		1		(2	)
Municipal securities		—		—		—		—			361		359		4		(2	)
Asset-backed securities		173		172		1		—			171		170		1		—
Mortgage-backed securities		163		162		2		(1	)		112		108		5		(1	)
Foreign government bonds		51		51		—		—			10		10		—		—
Other debt securities		3		1		2		—			3		1		2		—
Equity securities		327		313		14		—			321		295		34		(8	)

	$	3,930	$	3,903	$	35	$	(8	)	$	3,657	$	3,614	$	59	$	(16	)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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