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Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2013
Financial Instruments [Abstract]  
Information about Certain Financial Assets and Liabilities
The following table provides additional information about certain of our financial assets and liabilities:
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

Selected financial assets measured at fair value on a recurring basis(a)
 
 
 
 
Trading securities(b)
 
$
126

 
$
142

Available-for-sale debt securities(c)
 
34,899

 
32,584

Available-for-sale money market funds(d)
 
945

 
1,727

Available-for-sale equity securities, excluding money market funds(c)
 
356

 
263

Derivative financial instruments in receivable positions(e):
 
 
 
 
Interest rate swaps
 
468

 
1,036

Foreign currency swaps
 
871

 
194

Foreign currency forward-exchange contracts
 
172

 
152

 
 
37,837

 
36,098

Other selected financial assets
 
 

 
 

Held-to-maturity debt securities, carried at amortized cost(c), (f)
 
9,139

 
1,459

Private equity securities, carried at equity method or at cost(f), (g)
 
2,270

 
1,239

 
 
11,409

 
2,698

Total selected financial assets
 
$
49,246

 
$
38,796

Financial liabilities measured at fair value on a recurring basis(a)
 
 

 
 

Derivative financial instruments in a liability position(h):
 
 

 
 

Interest rate swaps
 
$
301

 
$
33

Foreign currency swaps
 
110

 
428

Foreign currency forward-exchange contracts
 
219

 
243

 
 
630

 
704

Other financial liabilities(i)
 
 

 
 

Short-term borrowings, carried at historical proceeds, as adjusted(f)
 
6,027

 
6,424

Long-term debt, carried at historical proceeds, as adjusted(j), (k)
 
30,462

 
31,036

 
 
36,489

 
37,460

Total selected financial liabilities
 
$
37,119

 
$
38,164

(a) 
We use a market approach in valuing financial instruments on a recurring basis. For additional information, see Note 1E. Basis of Presentation and Significant Accounting Policies: Fair Value. All of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except less than 1% that use Level 1 or Level 3 inputs.
(b) 
Trading securities are held in trust for legacy business acquisition severance benefits.
(c) 
Gross unrealized gains and losses are not significant.
(d) 
Includes $408 million as of December 31, 2012 of money market funds held in trust in connection with the asbestos litigation involving Quigley Company, Inc., (Quigley), then a wholly owned subsidiary. In the fourth quarter of 2013, the amended reorganization plan for Quigley became effective. For information about the disposition of the money market fund investment in connection with the amended reorganization plan for Quigley becoming effective, see Note 17A5. Commitments and Contingencies: Certain Matters Resolved in 2013.
(e) 
Designated as hedging instruments, except for certain contracts used as offsets; namely, interest rate swaps with fair values of $38 million, foreign currency swaps with fair values of $30 million and foreign currency forward-exchange contracts with fair values of $66 million as of December 31, 2013; and, foreign currency forward-exchange contracts with fair values of $102 million as of December 31, 2012.
(f) 
The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities at cost and short-term borrowings not measured at fair value on a recurring basis were not significant as of December 31, 2013 or December 31, 2012. The fair value measurements of our held-to-maturity debt securities and our short-term borrowings are based on Level 2 inputs, using a market approach. The fair value measurements of our private equity securities at cost are based on Level 3 inputs.
(g) 
Our private equity securities represent investments in the life sciences sector. The increase in 2013 primarily reflects an increased investment in our equity-method investment in China. For additional information, see Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
(h) 
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency swaps with fair values of $76 million and foreign currency forward-exchange contracts with fair values of $77 million as of December 31, 2013; and foreign currency forward-exchange contracts with fair values of $141 million and foreign currency swaps with fair values of $129 million as of December 31, 2012.
(i) 
Some carrying amounts may include adjustments for discount or premium amortization or for the effect of hedging the interest rate fair value risk associated with certain financial liabilities by interest rate swaps.
(j) 
Includes foreign currency debt with fair values of $651 million as of December 31, 2013 and $809 million as of December 31, 2012, which are used as hedging instruments.
(k) 
The fair value of our long-term debt (not including the current portion of long-term debt) is $35.1 billion as of December 31, 2013 and $37.5 billion as of December 31, 2012. The fair value measurements for our long-term debt are based on Level 2 inputs, using a market approach. Generally, the difference between the fair value of our long-term debt and the amount reported on the consolidated balance sheet is due to a decline in relative market interest rates since the debt issuance.
Selected Financial Assets and Liabilities Presented in the Condensed Consolidated Balance Sheets
The following table provides the classification of these selected financial assets and liabilities in our consolidated balance sheets:
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
2013

 
2012

Assets
 
 
 
 
Cash and cash equivalents
 
$
1,104

 
$
947

Short-term investments
 
30,225

 
22,318

Long-term investments
 
16,406

 
14,149

Other current assets(a)
 
286

 
296

Other noncurrent assets(b)
 
1,225

 
1,086

 
 
$
49,246

 
$
38,796

Liabilities
 
 

 
 

Short-term borrowings, including current portion of long-term debt
 
$
6,027

 
$
6,424

Other current liabilities(c)
 
303

 
330

Long-term debt
 
30,462

 
31,036

Other noncurrent liabilities(d)
 
327

 
374

 
 
$
37,119

 
$
38,164

(a) 
As of December 31, 2013, derivative instruments at fair value include interest rate swaps ($90 million), foreign currency swaps ($24 million) and foreign currency forward-exchange contracts ($172 million) and, as of December 31, 2012, include foreign currency swaps ($144 million) and foreign currency forward-exchange contracts ($152 million).
(b) 
As of December 31, 2013, derivative instruments at fair value include interest rate swaps ($378 million) and foreign currency swaps ($847 million) and, as of December 31, 2012, include interest rate swaps ($1.0 billion) and foreign currency swaps ($50 million).
(c) 
At December 31, 2013, derivative instruments at fair value include foreign currency swaps ($84 million) and foreign currency forward-exchange contracts ($219 million) and, as of December 31, 2012, include foreign currency swaps ($87 million) and foreign currency forward-exchange contracts ($243 million).
(d) 
At December 31, 2013, derivative instruments at fair value include interest rate swaps ($301 million) and foreign currency swaps ($26 million) and, as of December 31, 2012, include interest rate swaps ($33 million) and foreign currency swaps ($341 million).
Contractual Maturities of Available-for-sale and Held-to-maturity Debt Securities
The following table provides the contractual maturities of the available-for-sale and held-to-maturity debt securities:
 
 
Years
 
 

 
 
 

 
Over 1

 
Over 5

 
 
 
December 31,
2013

(MILLIONS OF DOLLARS)
 
Within 1

 
to 5

 
to 10

 
Over 10

 
Total

Available-for-sale debt securities
 
 

 
 

 
 

 
 
 
 

Western European, Scandinavian and other government debt(a)
 
$
10,253

 
$
2,380

 
$
—

 
$
—

 
$
12,633

Corporate debt(b)
 
3,997

 
4,822

 
1,236

 
302

 
10,357

Reverse repurchase agreements(c)
 
3,519

 
—

 
—

 
—

 
3,519

Federal Home Loan Mortgage Corporation and Federal National Mortgage Association asset-backed securities
 
—

 
2,593

 
10

 
303

 
2,906

Western European, Scandinavian and other government agency debt(a)
 
1,686

 
453

 
—

 
—

 
2,139

Supranational debt(a)
 
1,006

 
1,009

 
—

 
—

 
2,015

Government National Mortgage Association and other U.S. government guaranteed asset-backed securities
 
705

 
159

 
—

 
41

 
905

U.S. government debt
 
185

 
222

 
18

 
—

 
425

 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity debt securities
 
 

 
 

 
 

 
 
 
 

Western European, Scandinavian and other government debt(a)
 
5,909

 
—

 
—

 
—

 
5,909

Western European, Scandinavian and other government agency debt, certificates of deposit and other(a)
 
3,113

 
117

 
—

 
—

 
3,230

Total debt securities
 
$
30,373

 
$
11,755

 
$
1,264

 
$
646

 
$
44,038

(a) 
All issued by above-investment-grade governments, government agencies or supranational entities, as applicable.
(b) 
Largely issued by above-investment-grade institutions in the financial services sector.
(c) 
Involving U.S. securities.
Schedule of Long-term Debt Instruments
The following table provides the components of our senior unsecured long-term debt:
 
 
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
Maturity Date
 
2013

 
2012

6.20%(a)
 
March 2019
 
$
3,234

 
$
3,327

5.35%(a)
 
March 2015
 
3,037

 
3,065

4.75% euro(b)
 
June 2016
 
2,752

 
2,638

5.75% euro(b)
 
June 2021
 
2,748

 
2,634

7.20%(a)
 
March 2039
 
2,603

 
2,903

6.50% U.K. pound(b)
 
June 2038
 
2,459

 
2,407

5.95%
 
April 2037
 
2,085

 
2,086

4.55% euro
 
May 2017
 
1,390

 
1,384

5.50%
 
February 2016
 
1,033

 
1,048

5.50%(c)
 
February 2014
 
—

 
1,832

4.75% euro(d)
 
December 2014
 
—

 
1,284

Notes and other debt with a weighted-average interest rate of 5.47%(e)
 
2021–2043
 
4,810

 
3,403

Notes and other debt with a weighted-average interest rate of 4.70%(f)
 
2016–2018
 
3,683

 
2,254

Foreign currency notes and other foreign currency debt with a weighted-
average interest rate of 3.02%(g)
 
2015-2016
 
628

 
771

Long-term debt
 
 
 
$
30,462

 
$
31,036

Current portion of long-term debt (not included above)
 
 
 
$
2,060

 
$
2,449

(a) 
Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present values of the remaining scheduled payments of principal and interest discounted at the U.S. Treasury rate plus 0.50% plus, in each case, accrued and unpaid interest.
(b) 
Instrument is callable by us at any time at the greater of 100% of the principal amount or the sum of the present values of the remaining scheduled payments of principal and interest discounted at a comparable government bond rate plus 0.20% plus, in each case, accrued and unpaid interest.
(c) 
At December 31, 2013, the note was called.
(d) 
At December 31, 2013, the note has been reclassified to Current portion of long-term debt.
(e) 
Contains debt issuances with a weighted-average maturity of approximately 24 years.
(f) 
Contains debt issuances with a weighted-average maturity of approximately 4 years.
(g) 
Contains debt issuances with a weighted-average maturity of approximately 2 years.
Schedule of Maturities of Long-term Debt
The following table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2013:
(MILLIONS OF DOLLARS)
 
2015

 
2016

 
2017

 
2018

 
After 2018

 
Total

Maturities
 
$
3,040

 
$
4,412

 
$
2,660

 
$
2,413

 
$
17,937

 
$
30,462
Schedule of Gains/(Losses) Incurred to Hedge or Offset Operational Foreign Exchange or Interest Rate Risk
The following table provides information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:
 
 
Amount of
Gains/(Losses)
Recognized in OID(a), (b), (c)
 
Amount of Gains/(Losses)
Recognized in OCI
(Effective Portion)(a), (d)
 
Amount of Gains/(Losses)
Reclassified from
OCI into OID
(Effective Portion)(a), (d)
(MILLIONS OF DOLLARS)
 
Dec 31,
2013

 
Dec 31,
2012

 
Dec 31,
2013

 
Dec 31,
2012

 
Dec 31,
2013

 
Dec 31,
2012

Derivative Financial Instruments in Cash Flow Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency swaps
 
$
—

 
$
—

 
$
554

 
$
703

 
$
220

 
$
257

Foreign currency forward-exchange contracts
 
—

 
—

 
(66
)
 
42

 
(126
)
 
359

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments in Net Investment Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency swaps
 
(3
)
 
(4
)
 
156

 
200

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward-exchange contracts
 
(3
)
 
—

 
(1
)
 
 
 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments Not Designated as Hedges:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency forward-exchange contracts
 
56

 
(61
)
 
—

 
—

 
—

 
—

Foreign currency swaps
 
(18
)
 
(7
)
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency long-term debt
 
—

 
—

 
133

 
88

 
—

 
—

All other net
 
(1
)
 
7

 
—

 
—

 
—

 
—

 
 
$
31

 
$
(65
)
 
$
776

 
$
1,033

 
$
94

 
$
616

(a) 
OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the consolidated statements of income. OCI = Other comprehensive income/(loss), included in the consolidated statements of comprehensive income.
(b) 
Also includes gains and losses attributable to derivative instruments designated and qualifying as fair value hedges as well as the offsetting gains and losses attributable to the hedged items in such hedging relationships.
(c) 
There was no significant ineffectiveness for any period presented.
(d) 
Amounts presented represent the effective portion of the gain or loss. For derivative financial instruments in cash flow hedge relationships, the effective portion is included in Other comprehensive income/(loss)––Unrealized holding gains/(losses) on derivative financial instruments. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in Other comprehensive income/(loss)––Foreign currency translation adjustments.