FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2017

FINANCIAL INSTRUMENTS

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

($ in millions)

At December 31, 2017:	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents (1)
Time deposits and certificates of deposit	$	—	$	8,066	$	—	$	8,066
Commercial paper	—		96		—		96
Money market funds	26		—		—		26
Canadian government securities	—		398		—		398
Total	26		8,560		—		8,586		(6)
Debt securities—current (2)	—		608		—		608		(6)
Debt securities—noncurrent (3)	4		7		—		11
Available-for-sale equity investments (3)	4		—		—		4
Derivative assets (4)
Interest rate contracts	—		461		—		461
Foreign exchange contracts	—		469		—		469
Equity contracts	—		12		—		12
Total	—		942		—		942		(7)
Total assets	$	33	$	10,117	$	—	$	10,151	(7)
Liabilities
Derivative liabilities(5)
Foreign exchange contracts	$	—	$	378	$	—	$	378
Equity contracts	—		3		—		3
Interest rate contracts	—		34		—		34
Total liabilities	$	—	$	415	$	—	$	415	(7)

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

(2) U.S. government securities 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, 2017 were $185 million and $757 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, 2017 were $377 million and $38 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 each would have been reduced by $255 million.

($ in millions)

At December 31, 2016:	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents (1)
Time deposits and certificates of deposit	$	—	$	3,629	$	—	$	3,629
Money market funds	1,204		—		—		1,204
Total	1,204		3,629		—		4,832		(6)
Debt securities—current (2)	—		699		—		699		(6)
Debt securities—noncurrent (3)	1		6		—		8
Available-for-sale equity investments (3)	7		—		—		7
Derivative assets (4)
Interest rate contracts	—		555		—		555
Foreign exchange contracts	—		560		—		560
Equity contracts	—		11		—		11
Total	—		1,126		—		1,126		(7)
Total assets	$	1,212	$	5,460	$	—	$	6,672	(7)
Liabilities
Derivative liabilities (5)
Foreign exchange contracts	$	—	$	188	$	—	$	188
Equity contracts	—		10		—		10
Interest rate contracts	—		8		—		8
Total liabilities	$	—	$	206	$	—	$	206	(7)

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

(2) U.S. government securities 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, 2016 were $532 million and $594 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, 2016 were $145 million and $61 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 each would have been reduced by $116 million.

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

($ in millions)

			Gross		Gross
	Adjusted		Unrealized		Unrealized		Fair
At December 31, 2017:	Cost		Gains		Losses		Value
Debt securities—noncurrent (1)	$	8	$	3	$	—	$	11
Available-for-sale equity investments (1)	1		3		0		4

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

($ in millions)

			Gross		Gross
	Adjusted		Unrealized		Unrealized		Fair
At December 31, 2016:	Cost		Gains		Losses		Value
Debt securities—noncurrent (1)	$	5	$	3	$	—	$	8
Available-for-sale equity investments (1)	3		5		0		7

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

Sales of debt and available-for-sale equity investments

($ in millions)

For the year ended December 31:	2017		2016		2015
Proceeds	$	7	$	151	$	8
Gross realized gains (before taxes)	3		3		1
Gross realized losses (before taxes)	2		37		1

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

($ in millions)

For the year ended December 31:	2017		2016
Net unrealized gains/(losses) arising during the period	$	0	$	(23	)
Net unrealized (gains)/losses reclassified to net income*	1		21

*There were no writedowns in 2017 and 2016, respectively.

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

($ in millions)

	Fair Value of Derivative Assets					Fair Value of Derivative Liabilities
	Balance Sheet					Balance Sheet
At December 31:	Classification	2017		2016		Classification	2017		2016
Designated as hedging instruments
Interest rate contracts	Prepaid expenses and other current assets	$	2	$	—	Other accrued expenses and liabilities	$	—	$	—
	Investments and sundry assets	459		555		Other liabilities	34		8
Foreign exchange contracts	Prepaid expenses and other current assets	111		421		Other accrued expenses and liabilities	318		46
	Investments and sundry assets	298		17		Other liabilities	3		35
	Fair value of derivative assets	$	870	$	993	Fair value of derivative liabilities	$	355	$	89
Not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current assets	$	61	$	100	Other accrued expenses and liabilities	$	57	$	89
	Investments and sundry assets	—		22		Other liabilities	—		18
Equity contracts	Prepaid expenses and other current assets	12		11		Other accrued expenses and liabilities	3		10
	Fair value of derivative assets	$	72	$	133	Fair value of derivative liabilities	$	60	$	117
Total derivatives		$	942	$	1,126		$	415	$	206
Total debt designated as hedging instruments(1)
Short-term debt		N/A		N/A			$	—	$	1,125
Long-term debt		N/A		N/A			$	6,471	$	7,844
		N/A		N/A			$	6,471	$	8,969
Total		$	942	$	1,126		$	6,886	$	9,175

N/A—Not applicable

(1) Debt designated as hedging instruments are reported at carrying value.

Effect of Derivative Instruments in the Consolidated Statement of Earnings

($ in millions)

	Gain/(Loss) Recognized in Earnings
	Consolidated									Attributable to Risk
	Statement of	Recognized on Derivatives								Being Hedged(2)
For the year ended December 31:	Earnings Line Item	2017		2016			2015			2017		2016		2015
Derivative instruments in fair value hedges(1)(5)
Interest rate contracts	Cost of financing	$	1	$	28		$	108		$	74	$	58	$	(1	)
	Interest expense	1		31			94			69		63		(1		)
Derivative instruments not designated as hedging instruments
Foreign exchange contracts	Other (income) and expense	16		(189		)	127			N/A		N/A		N/A
Interest rate contracts	Other (income) and expense	—		0			(1		)	N/A		N/A		N/A
Equity contracts	SG&A expense	135		112			(27		)	N/A		N/A		N/A
	Other (income) and expense	—		(1		)	(9		)	N/A		N/A		N/A
Total		$	153	$	(18	)	$	291		$	144	$	121	$	(1	)

($ in millions)

	Gain/(Loss) Recognized in Earnings and Other Comprehensive Income
																	Ineffectiveness and
	Effective Portion							Consolidated	Effective Portion								Amounts Excluded from
For the year ended	Recognized in OCI							Statement of	Reclassified from AOCI								Effectiveness Testing(3)
December 31:	2017			2016		2015		Earnings Line Item	2017			2016			2015		2017		2016			2015
Derivative instruments in cash flow hedges
Interest rate contracts	$	—		$	—	$	—	Interest expense	$	(45	)	$	(24	)	$	0	$	—	$	—		$	—
Foreign exchange contracts	(58		)	243		618		Other (income) and expense	324			(68		)	731		1		(3		)	5
								Cost of sales*	3			(5		)	192		—		—			—
								Cost of services*	70			(8		)	0		—		—			—
								SG&A expense	11			4			149		—		—			—
Instruments in net investment hedges (4)
Foreign exchange contracts	(1,607		)	311		889		Cost of financing	—			—			—		11		—			—
								Interest expense	—			—			—		33		77			13
Total	$	(1,665	)	$	555	$	1,507		$	363		$	(102	)	$	1,072	$	45	$	74		$	18

*Reclassified to conform to 2017 presentation.

(1) 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.

(2) 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.

(3) The amount of gain/(loss) recognized in income represents ineffectiveness on hedge relationships.

(4) Instruments in net investment hedges include derivative and non-derivative instruments.

(5) For the years ended December 31, 2017, 2016 and 2015, fair value hedges resulted in losses of $2 million, $4 million and $2 million in ineffectiveness, respectively.

N/A—Not applicable