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Financial Instruments: (Tables)

3 Months Ended

Mar. 31, 2014

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

(Dollars in millions)
At March 31, 2014				Level 1		Level 2		Level 3		Total
Assets:
	Cash equivalents (1)
		Time deposits and certificates of deposit	$	—	$	4,619	$	—	$	4,619
		Commercial paper		—		559		—		559
		Money market funds		988		—		—		988
		U.S. government securities		—		599		—		599
		Canadian government securities		—		226		—		226
		Other securities		—		40		—		40
	Total			988		6,044		—		7,032	(6)
	Debt securities - current (2)			—		295		—		295	(6)
	Debt securities - noncurrent (3)			1		8		—		9
	Trading securities investments (3)			—		77		—		77
	Available-for-sale equity investments (3)			4		—		—		4
	Derivative assets (4)
		Interest rate contracts		—		363		—		363
		Foreign exchange contracts		—		297		—		297
		Equity contracts		—		17		—		17
	Total			—		678		—		678	(7)
Total assets			$	993	$	7,102	$	—	$	8,095	(7)
Liabilities:
	Derivative liabilities (5)
		Foreign exchange contracts	$	—	$	427	$	—	$	427
		Equity contracts		—		2		—		2
		Interest rate contracts		—		12		—		12
Total liabilities			$	—	$	441	$	—	$	441	(7)

(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position.

(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of

Financial Position.

(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments

and sundry assets in the Consolidated Statement of Financial Position at March 31, 2014 were $202 million and

$476 million, respectively.

(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other

liabilities in the Consolidated Statement of Financial Position at March 31, 2014 were $370 million and $71

million, respectively.

(6) Available-for-sale securities with carrying values that approximate fair value.

(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated

Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $221

million each.

(Dollars in millions)
At December 31, 2013				Level 1		Level 2		Level 3		Total
Assets:
	Cash equivalents (1)
		Time deposits and certificates of deposit	$	—	$	4,754	$	—	$	4,754
		Commercial paper		—		1,507		—		1,507
		Money market funds		1,728		—		—		1,728
		Other securities		—		8		—		8
	Total			1,728		6,269		—		7,997	(6)
	Debt securities - current (2)			—		350		—		350	(6)
	Debt securities - noncurrent (3)			1		7		—		9
	Available-for-sale equity investments (3)			18		—		—		18
	Derivative assets (4)
		Interest rate contracts		—		308		—		308
		Foreign exchange contracts		—		375		—		375
		Equity contracts		—		36		—		36
	Total			—		719		—		719	(7)
Total assets			$	1,747	$	7,345	$	—	$	9,092	(7)
Liabilities:
	Derivative liabilities (5)
		Interest rate contracts	$	—	$	13	$	—	$	13
		Foreign exchange contracts		—		484		—		484
		Equity contracts		—		4		—		4
Total liabilities			$	—	$	501	$	—	$	501	(7)

(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position.

(2) Commercial paper and certificates of deposit reported as marketable securities in the Consolidated Statement of

Financial Position.

(3) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

(4) The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments

and sundry assets in the Consolidated Statement of Financial Position at December 31, 2013 were $318 million and

$401 million, respectively.

(5) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other

liabilities in the Consolidated Statement of Financial Position at December 31, 2013 were $375 million and $126

million, respectively.

(6) Available-for-sale securities with carrying values that approximate fair value.

(7) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated

Statement of Financial Position, the total derivative asset and liability positions would have been reduced by $251

million each.

There were no transfers between Levels 1 and 2 for the three months ended March 31, 2014 and the year ended December 31, 2013.

Noncurrent debt and marketable equity securities available-for-sale and recorded at fair value

			Gross		Gross
(Dollars in millions)	Adjusted		Unrealized		Unrealized		Fair
At March 31, 2014:	Cost		Gains		Losses		Value
Debt securities – noncurrent(1)	$	8	$	2	$	—	$	9
Available-for-sale equity investments(1)	$	2	$	2	$	0	$	4

(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

			Gross		Gross
(Dollars in millions)	Adjusted		Unrealized		Unrealized		Fair
At December 31, 2013:	Cost		Gains		Losses		Value
Debt securities – noncurrent(1)	$	7	$	1	$	—	$	9
Available-for-sale equity investments(1)	$	20	$	2	$	4	$	18

(1) Included within investments and sundry assets in the Consolidated Statement of Financial Position.

Sales of debt and available-for-sale equity investments

Sales of debt and available-for-sale equity investments during the period were as follows:

(Dollars in millions)
For the three months ended March 31:		2014		2013
Proceeds	$	14	$	18
Gross realized gains (before taxes)		—		3
Gross realized losses (before taxes)		4		4

Unrealized gains/(losses) on available-for-sale debt and equity securities

(Dollars in millions)
For the three months ended March 31:		2014		2013
Net unrealized gains/(losses) arising during the period	$	0	$	$ (1)
Net unrealized (gains)/losses reclassified to net income*		3		0

* There were no writedowns for the three months ended March 31, 2014 and 2013.

Fair Value of Derivative Instruments in the Consolidated Statement of Financial Position

Fair Values of Derivative Instruments in the Consolidated Statement of Financial Position
As of March 31, 2014 and December 31, 2013

(Dollars in millions)	Fair Value of Derivative Assets					Fair Value of Derivative Liabilities
	Balance Sheet					Balance Sheet
	Classification	3/31/2014		12/31/2013		Classification	3/31/2014		12/31/2013
Designated as hedging
instruments:
Interest rate contracts:	Prepaid expenses and					Other accrued
	other current assets	$	—	$	—	expenses and liabilities	$	—	$	0
	Investments and sundry
	assets		363		308	Other liabilities		12		13
Foreign exchange	Prepaid expenses and					Other accrued
contracts:	other current assets		110		187	expenses and liabilities		270		331
	Investments and sundry
	assets		54		26	Other liabilities		55		112

Fair value of derivative						Fair value of derivative
assets		$	528	$	522	liabilities	$	337	$	456

Not designated as
hedging instruments:
Foreign exchange	Prepaid expenses and					Other accrued
contracts:	other current assets	$	74	$	94	expenses and liabilities	$	98	$	40
	Investments and sundry
	assets		59		67	Other liabilities		4		1
Equity contracts:	Prepaid expenses and					Other accrued
	other current assets		17		36	expenses and liabilities		2		4
Fair value of derivative						Fair value of derivative
assets		$	151	$	197	liabilities	$	104	$	45

Total debt designated as
hedging instruments:
	Short-term debt		N/A		N/A		$	—	$	190
	Long-term debt		N/A		N/A			6,116		6,111


Total		$	678	$	719		$	6,557	$	6,802

N/A-not applicable

Effect of Derivative Instruments in the Consolidated Statement of Earnings


The Effect of Derivative Instruments in the Consolidated Statement of Earnings
For the three months ended March 31, 2014 and 2013

(Dollars in millions)		Gain (Loss) Recognized in Earnings
		Consolidated
		Statement of	Recognized on				Attributable to Risk
		Earnings Line Item	Derivatives(1)				Being Hedged(2)
For the three months ended March 31:				2014		2013		2014		2013
Derivative instruments in fair value hedges:
Interest rate contracts		Cost of financing	$	48	$	(20)	$	(23)	$	46
		Interest expense		33		(13)		(15)		30
Derivative instruments not designated as
	hedging instruments(1):
Foreign exchange contracts		Other (income)
		and expense		(34)		(439)		N/A		N/A
Equity contracts		SG&A expense		21		85		N/A		N/A

Total			$	68	$	(387)	$	(38)	$	76

		Gain (Loss) Recognized in Earnings and Other Comprehensive Income
						Consolidated					(Ineffectiveness) and
		Effective Portion				Statement of	Effective Portion Reclassified				Amounts Excluded from
		Recognized in OCI				Earnings Line Item	from AOCI				Effectiveness Testing(3)
For the three months
	ended March 31:	2014		2013			2014		2013		2014		2013
Derivative instruments
	in cash flow hedges:
Interest rate contracts		$	—	$	—	Interest expense	$	—	$	—	$	—	$	—
						Other (income)
Foreign exchange			88		360	and expense		29		37		(0)		1
	contracts					Cost of sales		(26)		9		—		—
						SG&A expense		(2)		10		—		—
Instruments in net
	investment hedges(4):
Foreign exchange
	contracts		(26)		219	Interest expense		—		—		0		(1)

Total		$	62	$	579		$	1	$	56	$	(0)	$	0

N/A-not applicable

Note: OCI represents Other comprehensive income/(loss) in the Consolidated Statement of Comprehensive Income and AOCI represents Accumulated other comprehensive income/(loss) in the Consolidated Statement of Changes in Equity.

The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
The amount of gain (loss) recognized in income represents ineffectiveness on hedge relationships.
Instruments in net investment hedges include derivative and non-derivative instruments.

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the realized and unrealized gains and losses reported in the statement of income which have resulted from the sale and holding of marketable securities, respectively, as well as the sale or disposal of cost method investments. Such amounts would include realized gains and losses on the sale or disposal of trading, available-for-sale, and held-to-maturity securities, unrealized gains and losses on trading securities, unrealized gains and losses on available-for-sale and held-to-maturity securities transferred to the trading securities category, realized gains and losses on the sale or disposal of cost method investments, and losses recognized for other than temporary impairments (OTTI) of such investments.

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