Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

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, 2012						December 31, 2011
		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	$	163	$	-	$	4,450	$	196	$	-	$	3,727
Foreign exchange contracts (non-current)	Other assets		350		-		5,637		420		-		4,956
Foreign exchange contracts (current)	Accrued and other current liabilities		-		48		1,668		-		53		1,718
Foreign exchange contracts (non-current)	Deferred income taxes and noncurrent liabilities		-		7		426		-		1		104

		$	513	$	55	$	12,181	$	616	$	54	$	10,505


Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts (current)	Deferred income taxes and other current assets	$	55	$	-	$	4,256	$	139	$	-	$	5,306
Foreign exchange contracts (non-current)	Other assets		18		-		290		-		-		-
Foreign exchange contracts (current)	Accrued and other current liabilities		-		125		6,129		-		54		5,013

		$	73	$	125	$	10,675	$	139	$	54	$	10,319

		$	586	$	180	$	22,856	$	755	$	108	$	20,824

Location and Pretax Gain or Loss Amounts for Derivatives

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 September 30,				Nine Months Ended September 30,
($ in millions)	2012		2011		2012		2011

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

Derivatives designated in foreign currency cash flow hedging relationships
Foreign exchange contracts
Amount of (gain) loss reclassified from AOCI to Sales		(4)		30		49		57
Amount of loss (gain) recognized in OCI on derivatives		236		(70)		202		183

Derivatives designated in foreign currency net investment hedging relationships
Foreign exchange contracts
Amount of gain recognized in Other (income) expense, net on derivatives ⁽¹⁾		(5)		(1)		(15)		(9)
Amount of loss (gain) recognized in OCI on derivatives		54		124		(2)		158

Derivatives not designated in a hedging relationship
Foreign exchange contracts
Amount of loss (gain) recognized in Other (income) expense, net on derivatives ⁽²⁾		157		(351)		131		(31)
Amounts of loss recognized in Sales on hedged item		17		-		17		-

⁽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.

Gross Unrealized Gains and Losses on Available-For-Sale Investments

Information on available-for-sale investments is as follows:


	September 30, 2012								December 31, 2011
	Fair		Amortized		Gross Unrealized				Fair		Amortized		Gross Unrealized
($ in millions)	Value		Cost		Gains		Losses		Value		Cost		Gains		Losses


Corporate notes and bonds	$	3,705	$	3,650	$	56	$	(1)	$	2,032	$	2,024	$	16	$	(8)
U.S. government and agency securities		1,156		1,154		2		-		1,021		1,018		3		-
Asset-backed securities		648		644		4		-		292		292		1		(1)
Mortgage-backed securities		334		334		2		(2)		223		223		1		(1)
Commercial paper		168		168		-		-		1,029		1,029		-		-
Foreign government bonds		72		71		1		-		72		72		-		-
Other debt securities		-		-		-		-		3		1		2		-
Equity securities		420		384		36		-		397		383		14		-

	$	6,503	$	6,405	$	101	$	(3)	$	5,069	$	5,042	$	37	$	(10)

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

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 In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

($ in millions)	September 30, 2012								December 31, 2011

Assets
Investments
Corporate notes and bonds	$	-	$	3,705	$	-	$	3,705	$	-	$	2,032	$	-	$	2,032
U.S. government and agency securities		-		1,156		-		1,156		-		1,021		-		1,021
Asset-backed securities ⁽¹⁾		-		648		-		648		-		292		-		292
Mortgage-backed securities ⁽¹⁾		-		334		-		334		-		223		-		223
Commercial paper		-		168		-		168		-		1,029		-		1,029
Foreign government bonds		-		72		-		72		-		72		-		72
Equity securities		209		25		-		234		205		22		-		227
Other debt securities		-		-		-		-		-		3		-		3

		209		6,108		-		6,317		205		4,694		-		4,899


Other assets
Securities held for employee compensation		186		-		-		186		170		-		-		170

Derivative assets ⁽²⁾
Purchased currency options		-		541		-		541		-		613		-		613
Forward exchange contracts		-		45		-		45		-		142		-		142

		-		586		-		586		-		755		-		755

Total assets	$	395	$	6,694	$	-	$	7,089	$	375	$	5,449	$	-	$	5,824


Liabilities
Derivative liabilities ⁽²⁾
Forward exchange contracts	$	-	$	176	$	-	$	176	$	-	$	107	$	-	$	107
Written currency options		-		4		-		4		-		1		-		1

Total liabilities	$	-	$	180	$	-	$	180	$	-	$	108	$	-	$	108

- 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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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

+ References+ Details