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Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2013
Fair Values of Outstanding Derivative Instruments

The fair values of outstanding derivative instruments are summarized as follows:

 

 

(Stated in millions)

 

  

 

 

Fair Value of Derivatives

 

  

Consolidated Balance Sheet Classification

 

Sept. 30,
2013

 

  

Dec. 31,
2012

 

  

 

Derivative Assets

 

 

 

  

 

 

 

  

 

Derivatives designated as hedges:

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

  66

  

  

$

  26

 

  

Other current assets

Foreign exchange contracts             

 

  3

  

  

 

  22

 

  

Other Assets

Interest rate swaps             

 

—

  

  

 

  2

 

  

Other Assets

 

$

  69

  

  

$

  50

 

  

 

Derivatives not designated as hedges:

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

  12

  

  

$

  10

 

  

Other current assets

Foreign exchange contracts             

 

  5

  

  

 

  6

 

  

Other Assets

 

$

  17

  

  

$

  16

 

  

 

 

$

  86

  

  

$

  66

 

  

 

Derivative Liabilities

 

 

 

  

 

 

 

  

 

Derivatives designated as hedges:

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

  12

  

  

$

  80

 

  

Accounts payable and accrued liabilities

Foreign exchange contracts             

 

  3

  

  

 

  19

 

  

Other Liabilities

 

$

  15

  

  

$

  99

 

  

 

Derivatives not designated as hedges:

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

  6

  

  

$

  3

 

  

Accounts payable and accrued liabilities

 

$

  21

  

  

$

  102

 

  

 

 
Effect of Derivative Instruments Designated as Fair Value Hedges and Not Designated as Hedges on Consolidated Statement of Income

The effect of derivative instruments designated as fair value hedges and those not designated as hedges on the Consolidated Statement of Income was as follows:

 

 

(Stated in millions)

 

  

 

 

Gain (Loss) Recognized in Income

 

  

 

 

Third Quarter

 

  

Nine Months

 

  

Consolidated Statement

of Income Classification

 

2013

 

  

2012

 

  

2013

 

  

2012

 

  

Derivatives designated as fair value hedges:

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

—

  

  

$

(58

) 

  

$

—

  

  

$

(58

)

  

Cost of revenue

Interest rate swaps             

 

—

  

  

 

  1

  

  

 

(2

) 

  

 

  2

 

  

Interest expense

 

$

—

  

  

$

(57

) 

  

$

(2

) 

  

$

(56

)

  

 

Derivatives not designated as hedges:

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  

 

Foreign exchange contracts             

$

  31

 

  

$

(22

) 

  

$

  8

 

  

$

  10

 

  

Cost of revenue

 

$

  31

 

  

$

(22

) 

  

$

  8

 

  

$

  10

 

  

 

 
Effect of Derivative Instruments in Cash Flow Hedging Relationships on Income and Accumulated Other Comprehensive Loss (AOCL)

The effect of derivative instruments in cash flow hedging relationships on income and Accumulated other Comprehensive Loss (AOCL) was as follows:

 

 

(Stated in millions)

 

 

 

 

Gain (Loss) Reclassified from
AOCL into Income

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

Consolidated Statement

of Income Classification

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

Foreign exchange contracts             

$

  33

  

 

$

  97

  

 

$

(8

) 

 

$

(48

) 

 

Cost of revenue

Foreign exchange contracts             

 

(3

) 

 

 

(5

) 

 

 

(7

) 

 

 

(10

) 

 

Research & engineering

 

$

  30

  

 

$

  92

 

 

$

(15

) 

 

$

(58

) 

 

 

 

 

(Stated in millions)

 

 

 

 

Gain (Loss) Recognized in AOCL

 

 

 

 

Third Quarter

 

  

Nine Months

 

 

 

 

2013

 

  

2012

 

  

2013

 

 

2012

 

 

 

Foreign exchange contracts             

$

  76

  

  

$

  142

  

  

$

(27

) 

 

$

(35

)