Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2011

Derivative Financial Instruments

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 September 30, 2011 and December 31, 2010

	Fair Value of Derivative Assets					Fair Value of Derivative Liabilities
	Balance Sheet					Balance Sheet
(Dollars in millions)	Classification	9/30/2011		12/31/2010		Classification	9/30/2011		12/31/2010
Designated as hedging instruments:
Interest rate contracts:	Prepaid expenses and other current assets	$	26	$	33	Other accrued expenses and liabilities	$	—	$	—
	Investments and sundry assets	870		514		Other liabilities	—		—
Foreign exchange contracts:	Prepaid expenses and other current assets	358		224		Other accrued expenses and liabilities	363		498
	Investments and sundry assets	4		22		Other liabilities	112		135
Fair value of derivative assets		$	1,257	$	794	Fair value of derivative liabilities	$	475	$	633
Not designated as hedging instruments:
Foreign exchange contracts:	Prepaid expenses and other current assets	$	101	$	242	Other accrued expenses and liabilities	$	60	$	370
	Investments and sundry assets	26		51		Other liabilities	—		—
Equity contracts:	Prepaid expenses and other current assets	7		12		Other accrued expenses and liabilities	25		3
Fair value of derivative assets		$	134	$	305	Fair value of derivative liabilities	$	84	$	373
Total debt designated as hedging instruments:
Short-term debt		N/A		N/A			$	808	$	823
Long-term debt		N/A		N/A			1,915		1,746
Total		$	1,391	$	1,099		$	3,282	$	3,576

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 September 30, 2011 and 2010

	Gain (Loss) Recognized in Earnings
	Consolidated	Recognized on					Attributable to Risk
(Dollars in millions)	Statement of	Derivatives(1)					Being Hedged(2)
For the three months ended September 30:	Earnings Line Item	2011			2010		2011			2010
Derivative instruments in fair value hedges:
Interest rate contracts	Cost of financing	$	204		$	135	$	(166	)	$	(90	)
	Interest expense	141			86		(115		)	(58		)
Derivative instruments not designated as hedging instruments:(1)
Foreign exchange contracts	Other (income) and expense	183			584		N/A			N/A
Equity contracts	SG&A expense	(100		)	76		N/A			N/A
Warrants	Other (income) and expense	10			—		N/A			N/A
Total		$	438		$	881	$	(281	)	$	(148	)

	Gain (Loss) Recognized in Earnings and Other Comprehensive Income
													Ineffectiveness and
	Effective Portion					Consolidated	Effective Portion Reclassified						Amounts Excluded from
For the three months ended	Recognized in AOCI					Statement of	from AOCI to Earnings						Effectiveness Testing(3)
September 30:	2011		2010			Earnings Line Item	2011			2010			2011			2010
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—		Interest expense	$	(2	)	$	(2	)	$	—		$	—
Foreign exchange contracts	295		(927		)	Other (income) and expense	(86		)	(5		)	(2		)	4
						Cost of sales	(60		)	1			—			—
						SG&A expense	(19		)	(2		)	—			—
Instruments in net investment hedges(4):
Foreign exchange contracts	237		(440		)	Interest expense	—			0			(4		)	1
Total	$	532	$	(1,367	)		$	(167	)	$	(7	)	$	(6	)	$	5

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

(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.

The Effect of Derivative Instruments in the Consolidated Statement of Earnings

For the nine months ended September 30, 2011 and 2010

	Gain (Loss) Recognized in Earnings
	Consolidated	Recognized on					Attributable to Risk
(Dollars in millions)	Statement of	Derivatives(1)					Being Hedged(2)
For the nine months ended September 30:	Earnings Line Item	2011			2010		2011			2010
Derivative instruments in fair value hedges:
Interest rate contracts	Cost of financing	$	263		$	382	$	(142	)	$	(251	)
	Interest expense	183			245		(99		)	(161		)
Derivative instruments not designated as hedging instruments:(1)
Foreign exchange contracts	Other (income) and expense	388			279		N/A			N/A
Equity contracts	SG&A expense	(28		)	34		N/A			N/A
Warrants	Other (income) and expense	10			—		N/A			N/A
Total		$	816		$	940	$	(241	)	$	(412	)

	Gain (Loss) Recognized in Earnings and Other Comprehensive Income
													Ineffectiveness and
	Effective Portion					Consolidated	Effective Portion Reclassified						Amounts Excluded from
For the nine months ended	Recognized in AOCI					Statement of	from AOCI to Earnings						Effectiveness Testing(3)
September 30:	2011			2010		Earnings Line Item	2011			2010			2011			2010
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—		$	—	Interest expense	$	(6	)	$	(6	)	$	—		$	—
Foreign exchange contracts	(159		)	464		Other (income) and expense	(256		)	(19		)	(2		)	(3		)
						Cost of sales	(163		)	(81		)	—			—
						SG&A expense	(70		)	(46		)	—			—
Instruments in net investment hedges(4):
Foreign exchange contracts	(15		)	147		Interest expense	—			0			(10		)	1
Total	$	(174	)	$	611		$	(494	)	$	(152	)	$	(12	)	$	(2	)

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

(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.