Derivatives (Tables)

6 Months Ended

Jun. 30, 2020

Derivatives

Gain (loss) on derivative instruments designated as cash flow hedges

	Pretax Gain (Loss)
	Recognized in Other		Pretax Gain (Loss) Reclassified
	Comprehensive		from Accumulated Other
	Income on Derivative		Comprehensive Income into Income
Three months ended June 30, 2020 (Millions)	Amount		Location	Amount
Foreign currency forward/option contracts	$	(15)	Cost of sales	$	33
Interest rate contracts		—	Interest expense		(2)
Total	$	(15)		$	31

Six months ended June 30, 2020 (Millions)	Amount		Location	Amount
Foreign currency forward/option contracts	$	64	Cost of sales	$	51
Interest rate contracts		(2)	Interest expense		(4)
Total	$	62		$	47

Three months ended June 30, 2019 (Millions)	Amount		Location	Amount
Foreign currency forward/option contracts	$	2	Cost of sales	$	21
Interest rate contracts		(32)	Interest expense		(1)
Total	$	(30)		$	20

Six months ended June 30, 2019 (Millions)	Amount		Location	Amount
Foreign currency forward/option contracts	$	32	Cost of sales	$	28
Interest rate contracts		(49)	Interest expense		(1)
Total	$	(17)		$	27

Gain (loss) on derivative instruments designated as fair value hedges

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:

					Cumulative Amount of Fair Value Hedging
	Carrying Value of the				Adjustment Included in the Carrying Value
	Hedged Liabilities (in millions)				of the Hedged Liabilities (in millions)
Location on the Consolidated Balance Sheet	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Short-term borrowings and current portion of long-term debt	$	500	$	499	$	1	$	—
Long-term debt		776		775		21		22
Total	$	1,276	$	1,274	$	22	$	22

Gain (loss) on derivative and non-derivative instruments designated as net investment hedges

	Pretax Gain (Loss)
	Recognized as
	Cumulative Translation		Amount of Gain (Loss) Excluded
	within Other		from Effectiveness Testing
	Comprehensive Income		Recognized in Income
Three months ended June 30, 2020 (Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	(11)	Cost of sales	$	—
Foreign currency forward contracts		4	Cost of sales		—
Total	$	(7)		$	—

Six months ended June 30, 2020 (Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	4	Cost of sales	$	—
Foreign currency forward contracts		5	Cost of sales		5
Total	$	9		$	5

Three months ended June 30, 2019 (Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	(64)	Cost of sales	$	—
Foreign currency forward contracts		(10)	Cost of sales		7
Total	$	(74)		$	7

Six months ended June 30, 2019 (Millions)	Amount		Location	Amount
Foreign currency denominated debt	$	28	Cost of sales	$	—
Foreign currency forward contracts		5	Cost of sales		12
Total	$	33		$	12

Gain (loss) on derivative instruments not designated as hedging instruments

	Three months ended June 30, 2020			Six months ended June 30, 2020
	Gain (Loss) on Derivative Recognized in			Gain (Loss) on Derivative Recognized in
	Income			Income
(Millions)	Location	Amount		Location	Amount
Foreign currency forward/option contracts	Cost of sales	$	(2)	Cost of sales	$	2
Foreign currency forward contracts	Interest expense		(11)	Interest expense		(27)
Total		$	(13)		$	(25)

	Three months ended June 30, 2019			Six months ended June 30, 2019
	Gain (Loss) on Derivative Recognized in			Gain (Loss) on Derivative Recognized in
	Income			Income
(Millions)	Location	Amount		Location	Amount
Foreign currency forward/option contracts	Cost of sales	$	—	Cost of sales	$	(2)
Foreign currency forward contracts	Interest expense		(10)	Interest expense		(18)
Total		$	(10)		$	(20)

Location in consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in cash flow or fair value hedging relationship

	Location and Amount of Gain (Loss) Recognized in Income				Location and Amount of Gain (Loss) Recognized in Income
	Three months ended June 30, 2020				Six months ended June 30, 2020
(Millions)	Cost of sales		Other expense (income), net		Cost of sales		Other expense (income), net
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded	$	3,805	$	111	$	7,914	$	207
The effects of cash flow and fair value hedging:
Gain or (loss) on cash flow hedging relationships:
Foreign currency forward/option contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	33	$	—	$	51	$	—
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income		—		(2)		—		(4)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	—	$	2	$	—	$	—
Derivatives designated as hedging instruments		—		(2)		—		—

	Location and Amount of Gain (Loss) Recognized in Income				Location and Amount of Gain (Loss) Recognized in Income
	Three months ended June 30, 2019				Six months ended June 30, 2019
(Millions)	Cost of sales		Other expense (income), net		Cost of sales		Other expense (income), net
Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded	$	4,313	$	256	$	8,623	$	304
The effects of cash flow and fair value hedging:
Gain or (loss) on cash flow hedging relationships:
Foreign currency forward/option contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	21	$	—	$	28	$	—
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income		—		(1)		—		(1)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	—	$	(7)	$	—	$	(12)
Derivatives designated as hedging instruments		—		7		—		12

Location and Fair Value of Derivative Instruments

	Gross		Assets			Liabilities
	Notional			Fair			Fair
June 30, 2020 (Millions)	Amount		Location	Value Amount		Location	Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts	$	1,715	Other current assets	$	73	Other current liabilities	$	5
Foreign currency forward/option contracts		828	Other assets		46	Other liabilities		2
Interest rate contracts		500	Other current assets		—	Other current liabilities		—
Interest rate contracts		603	Other assets		16	Other liabilities		—
Total derivatives designated as hedging instruments				$	135		$	7
Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts	$	3,530	Other current assets	$	14	Other current liabilities	$	25
Total derivatives not designated as hedging instruments				$	14		$	25
Total derivative instruments				$	149		$	32

	Gross		Assets			Liabilities
	Notional			Fair			Fair
December 31, 2019 (Millions)	Amount		Location	Value Amount		Location	Value Amount
Derivatives designated as
hedging instruments
Foreign currency forward/option contracts	$	1,995	Other current assets	$	64	Other current liabilities	$	9
Foreign currency forward/option contracts		1,041	Other assets		50	Other liabilities		3
Interest rate contracts		500	Other current assets		—	Other current liabilities		—
Interest rate contracts		603	Other assets		17	Other liabilities		—
Total derivatives designated as hedging instruments				$	131		$	12
Derivatives not designated as
hedging instruments
Foreign currency forward/option contracts	$	2,684	Other current assets	$	11	Other current liabilities	$	8
Total derivatives not designated as hedging instruments				$	11		$	8
Total derivative instruments				$	142		$	20

Offsetting Assets

Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

			Gross Amounts not Offset in the
			Consolidated Balance Sheet that are Subject
	Gross Amount of		to Master Netting Agreements
	Derivative Assets		Gross Amount of
	Presented in the		Eligible Offsetting		Cash
	Consolidated		Recognized		Collateral		Net Amount of
June 30, 2020 (Millions)	Balance Sheet		Derivative Liabilities		Received		Derivative Assets
Derivatives subject to master netting agreements	$	149	$	13	$	—	$	136
Derivatives not subject to master netting agreements		—						—
Total	$	149					$	136

December 31, 2019 (Millions)
Derivatives subject to master netting agreements	$	142	$	14	$	—	$	128
Derivatives not subject to master netting agreements		—						—
Total	$	142					$	128

Offsetting Liabilities

Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

			Gross Amounts not Offset in the
			Consolidated Balance Sheet that are Subject
	Gross Amount of		to Master Netting Agreements
	Derivative Liabilities		Gross Amount of
	Presented in the		Eligible Offsetting		Cash		Net Amount of
	Consolidated		Recognized		Collateral		Derivative
June 30, 2020 (Millions)	Balance Sheet		Derivative Assets		Pledged		Liabilities
Derivatives subject to master netting agreements	$	32	$	13	$	—	$	19
Derivatives not subject to master netting agreements		—						—
Total	$	32					$	19

December 31, 2019 (Millions)
Derivatives subject to master netting agreements	$	20	$	14	$	—	$	6
Derivatives not subject to master netting agreements		—						—
Total	$	20					$	6