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Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2016
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)
 
2016

 
2015

Selected financial assets measured at fair value on a recurring basis(a)
 
 
 
 
Trading funds and securities(b)
 
$
325

 
$
287

Available-for-sale debt securities(c)
 
18,632

 
32,078

Money market funds
 
1,445

 
934

Available-for-sale equity securities(c)
 
540

 
603

Derivative financial instruments in a receivable position(d):
 
 
 
 
Interest rate swaps
 
625

 
837

Foreign currency swaps
 
79

 
135

Foreign currency forward-exchange contracts
 
551

 
559

 
 
22,198

 
35,433

Other selected financial assets
 
 

 
 

Held-to-maturity debt securities, carried at amortized cost(c), (e)
 
1,242

 
1,388

Private equity securities, carried at equity-method or at cost-method(e), (f)
 
735

 
1,336

 
 
1,977

 
2,724

Total selected financial assets
 
$
24,175

 
$
38,157

Selected financial liabilities measured at fair value on a recurring basis(a)
 
 

 
 

Derivative financial instruments in a liability position(g):
 
 

 
 

Interest rate swaps
 
$
148

 
$
139

Foreign currency swaps
 
1,374

 
1,489

Foreign currency forward-exchange contracts
 
143

 
81

 
 
1,665

 
1,709

Other selected financial liabilities
 
 

 
 

Short-term borrowings:
 
 
 
 
Principal amount
 
10,674

 
10,160

Net fair value adjustments related to hedging and purchase accounting
 
24

 
2

Net unamortized discounts, premiums and debt issuance costs(h) 
 
(11
)
 
(3
)
Total short-term borrowings, carried at historical proceeds, as adjusted(e)
 
10,688

 
10,159

Long-term debt:
 
 
 
 
Principal amount
 
30,529

 
27,573

Net fair value adjustments related to hedging and purchase accounting
 
998

 
1,294

Net unamortized discounts, premiums and debt issuance costs(h) 
 
(130
)
 
(127
)
Total long-term debt, carried at historical proceeds, as adjusted(i)
 
31,398

 
28,740

 
 
42,085

 
38,899

Total selected financial liabilities
 
$
43,750

 
$
40,608

(a) 
We use a market approach in valuing financial instruments on a recurring basis. For additional information, see Note 1E. 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 2% that use Level 1 inputs and money market funds measured at net asset value.
(b) 
As of December 31, 2016, trading funds and securities are composed of $236 million of trading equity funds and $89 million of trading debt funds. As of December 31, 2015, trading funds and securities are composed of $185 million of trading equity funds and $102 million of trading debt funds. As of December 31, 2016 and December 31, 2015, trading equity funds of $71 million and $85 million, respectively, are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan.
(c) 
Gross unrealized gains and losses related to 2016 are not significant. Unrealized losses related to 2015 available-for-sale debt securities are $593 million and unrealized gains are $44 million. The vast majority of investments related to 2015, in an unrealized loss position, relate to the foreign exchange impact on foreign currency denominated securities, which are hedged with foreign currency forward-exchange contracts and cross-currency swaps. We have the intent and ability to hold such investments to maturity.
(d) 
Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $162 million as of December 31, 2016; and foreign currency forward-exchange contracts with fair values of $136 million as of December 31, 2015.
(e) 
The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities at cost-method and short-term borrowings not measured at fair value on a recurring basis were not significant as of December 31, 2016 or December 31, 2015. 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 carried at cost are based on Level 3 inputs. Short-term borrowings include foreign currency short-term borrowings with fair values of $547 million as of December 31, 2015, which are used as hedging instruments.
(f) 
Our private equity securities represent investments in the life sciences sector.
(g) 
Designated as hedging instruments, except for certain contracts used as offsets; namely, foreign currency swaps with fair values of $269 million and foreign currency forward-exchange contracts with fair values of $113 million as of December 31, 2016; and foreign currency swaps with fair values of $234 million and foreign currency forward-exchange contracts with fair values of $59 million as of December 31, 2015.
(h) 
We adopted a new standard as of January 1, 2016 that changed the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying value of that associated debt, consistent with the presentation of a debt discount. See Note 1B for additional information.
(i) 
The fair value of our long-term debt (not including the current portion of long-term debt) was $34.9 billion as of December 31, 2016 and $32.7 billion as of December 31, 2015. The fair value measurements for our long-term debt are based on Level 2 inputs, using a market approach.
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)
 
2016

 
2015

Assets
 
 
 
 
Cash and cash equivalents
 
$
547

 
$
978

Short-term investments
 
15,255

 
19,649

Other current assets(a)
 
567

 
587

Long-term investments
 
7,116

 
15,999

Other noncurrent assets(b)
 
689

 
944

 
 
$
24,175

 
$
38,157

Liabilities
 
 

 
 

Short-term borrowings, including current portion of long-term debt(c)
 
$
10,688

 
$
10,159

Other current liabilities(d)
 
443

 
645

Long-term debt(c)
 
31,398

 
28,740

Other noncurrent liabilities(e)
 
1,222

 
1,064

 
 
$
43,750

 
$
40,608

(a) 
As of December 31, 2016, derivative instruments at fair value include interest rate swaps ($26 million), foreign currency swaps ($43 million) and foreign currency forward-exchange contracts ($497 million) and, as of December 31, 2015, include interest rate swaps ($2 million), foreign currency swaps ($46 million) and foreign currency forward-exchange contracts ($538 million).
(b) 
As of December 31, 2016, derivative instruments at fair value include interest rate swaps ($599 million), foreign currency swaps ($36 million) and foreign currency forward-exchange contracts ($54 million) and, as of December 31, 2015, include interest rate swaps ($835 million), foreign currency swaps ($89 million) and foreign currency forward-exchange contracts ($20 million).
(c) 
We adopted a new standard as of January 1, 2016 that changed the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying value of that associated debt, consistent with the presentation of a debt discount. See Note 1B for additional information.
(d) 
At December 31, 2016, derivative instruments at fair value include interest rate swaps ($1 million), foreign currency swaps ($300 million) and foreign currency forward-exchange contracts ($143 million) and, as of December 31, 2015, include interest rate swaps ($5 million), foreign currency swaps ($560 million) and foreign currency forward-exchange contracts ($80 million).
(e) 
At December 31, 2016, derivative instruments at fair value include interest rate swaps ($147 million) and foreign currency swaps ($1.1 billion) and, as of December 31, 2015, include interest rate swaps ($134 million), foreign currency swaps ($928 million) and foreign currency forward-exchange contracts ($1 million).
Contractual Maturities of Available-for-sale and Held-to-maturity Debt Securities
The following table provides the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
 
 
Years
 
December 31,
2016

(MILLIONS OF DOLLARS)
 
Within 1

 
Over 1
to 5

 
Over 5
to 10

 
Over 10

 
Total

Available-for-sale debt securities
 
 
 
 
 
 
 
 
 
 
Corporate debt(a)
 
$
2,783

 
$
2,727

 
$
1,557

 
$
23

 
$
7,089

Western European, Scandinavian and other government debt(b)
 
4,661

 
432

 
—

 
—

 
5,093

U.S. government debt
 
2,134

 
88

 
—

 
—

 
2,222

Western European, Scandinavian, Australian and other government agency debt(b)
 
1,746

 
137

 
—

 
—

 
1,883

Supranational debt(b)
 
910

 
294

 
—

 
—

 
1,204

Other asset-backed debt(c)
 
367

 
217

 
18

 
3

 
605

Government National Mortgage Association and other U.S. government guaranteed asset-backed securities
 
535

 
—

 
—

 
—

 
535

Held-to-maturity debt securities
 
 
 
 
 
 

 
 
 
 

Time deposits and other
 
1,000

 
1

 
3

 
—

 
1,004

Western European government debt(b)
 
236

 
2

 
—

 
—

 
238

Total debt securities
 
$
14,371

 
$
3,898

 
$
1,579

 
$
26

 
$
19,873

(a) 
Issued by a diverse group of corporations, largely consisting of financial institutions, virtually all of which are investment-grade.
(b) 
Issued by governments, government agencies or supranational entities, as applicable, all of which are investment-grade.
(c) 
Includes receivable-backed, loan-backed, and mortgage-backed securities, all of which are investment-grade and in senior positions in the capital structure of the security. Receivable-backed securities are collateralized by credit cards receivables, and loan-backed securities are collateralized by senior secured obligations of a diverse pool of companies or student loans. Mortgage-backed securities are collateralized by diversified pools of residential and commercial mortgages.
Schedule of Long-term Debt Instruments

Long Term Debt
The following table provides the components of our senior unsecured long-term debt(a):
 
 
 
 
Principal
 
 
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
Maturity Date
 
2016
 
2015
4.55% euro(b)
 
May 2017
 
$
—

 
$
980

1.10%(b)
 
May 2017
 
—

 
1,000

1.20%
 
June 2018
 
1,250

 
—

1.50%
 
June 2018
 
1,000

 
1,000

6.20%
 
March 2019
 
—

 
3,250

2.10%
 
May 2019
 
1,500

 
1,500

1.70%
 
December 2019
 
1,000

 
—

5.75% euro
 
June 2021
 
2,108

 
2,178

1.95%
 
June 2021
 
1,150

 
—

2.20%
 
December 2021
 
1,000

 
—

3.00%
 
June 2023
 
1,000

 
1,000

3.40%
 
May 2024
 
1,000

 
1,000

2.75%
 
June 2026
 
1,250

 
—

3.00%
 
December 2026
 
1,750

 
—

4.00%
 
December 2036
 
1,000

 
—

5.95%
 
April 2037
 
2,000

 
2,000

6.50% U.K. pound
 
June 2038
 
1,852

 
2,223

7.20%
 
March 2039
 
2,500

 
2,500

4.40%
 
May 2044
 
1,000

 
500

4.125%
 
December 2046
 
1,250

 
—

Notes and other debt with a weighted-average interest rate of 3.30%(c)
 
2018–2021
 
2,464

 
3,974

Notes and other debt with a weighted-average interest rate of 5.99%(d)
 
2023–2043
 
4,455

 
4,468

Total principal amount of long-term debt
 
 
 
30,529

 
27,573

Net fair value adjustments related to hedging and purchase accounting
 
 
 
998

 
1,294

Net unamortized discounts, premiums and debt issuance costs
 
 
 
(130
)
 
(127
)
Total long-term debt, carried at historical proceeds, as adjusted
 
 
 
$
31,398

 
$
28,740

Current portion of long-term debt (not included above)
 
 
 
$
4,225

 
$
3,719

(a) 
Instrument is redeemable by us at any time at the greater of 100% of the principal amount of the notes or the sum of the present values of the remaining scheduled payments of principal and interest discounted at the U.S. Treasury rate plus an incremental spread ranging from 0.05% to 0.50%, plus, in each case, accrued and unpaid interest.
(b) 
At December 31, 2016, the debt issuances have been reclassified to the current portion of long-term debt.
(c) 
Contains debt issuances with a weighted-average maturity of approximately two years for balances that exist as of December 31, 2016.
(d) 
Contains debt issuances with a weighted-average maturity of approximately 16 years for balances that exist as of December 31, 2016.
The following table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2016:
(MILLIONS OF DOLLARS)
 
2018

 
2019

 
2020

 
2021

 
After 2021

 
Total

Maturities
 
$
3,567

 
$
3,350

 
$
360

 
$
4,241

 
$
19,879

 
$
31,398
Schedule of Maturities of Long-term Debt
The following table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2016:
(MILLIONS OF DOLLARS)
 
2018

 
2019

 
2020

 
2021

 
After 2021

 
Total

Maturities
 
$
3,567

 
$
3,350

 
$
360

 
$
4,241

 
$
19,879

 
$
31,398
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)
 
 
As of December 31,
(MILLIONS OF DOLLARS)
 
2016

 
2015

 
2016

 
2015

 
2016

 
2015

Derivative Financial Instruments in Cash Flow Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency swaps
 
$
—

 
$
—

 
$
(280
)
 
$
(826
)
 
$
(387
)
 
$
(613
)
Foreign currency forward-exchange contracts
 
(4
)
 
—

 
(164
)
 
1,028

 
(65
)
 
980

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments in Net Investment Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward-exchange contracts
 
1

 
(1
)
 
(15
)
 
256

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments Not Designated as Hedges:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency forward-exchange contracts
 
(92
)
 
(42
)
 
—

 
—

 
—

 
—

Foreign currency swaps
 
(13
)
 
(4
)
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
 
 

 
 

 
 

 
 

 
 

 
 

Foreign currency short-term borrowings
 
—

 
—

 
(26
)
 
3

 
—

 
—

All other net
 
—

 
(16
)
 
1

 
—

 
(1
)
 
—

 
 
$
(107
)
 
$
(64
)
 
$
(483
)
 
$
461

 
$
(452
)
 
$
367

(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) 
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) 
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, net. 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 loss––Foreign currency translation adjustments, net.