Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Gains (losses) recognized in earnings for derivatives designed as hedging instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under FASB ASC Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the first quarter of 2017 and 2016:



(in millions)	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)			Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)		Location in Statement of Operations
Three Months Ended March 31, 2017
Currency hedge contracts	$	(58	)	$	28	Cost of products sold
	$	(58	)	$	28
Three Months Ended March 31, 2016
Currency hedge contracts	$	59		$	48	Cost of products sold
	$	59		$	48

Gains (losses) recognized in earnings for derivatives not designated as hedging instruments

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was immaterial in all periods presented.

Net foreign currency gain (loss) [Table Text Block]

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:



(in millions)	Location in Statement of Operations	Three Months Ended
		March 31,
		2017			2016
Net gain (loss) on currency hedge contracts	Other, net	$	(17	)	$	(39	)
Net gain (loss) on foreign currency transaction exposures	Other, net	17			34
Net foreign currency gain (loss)	Other, net	$	—		$	(5	)

Classification of derivative assets and liabilities within level 2

The following are the balances of our derivative assets and liabilities as of March 31, 2017 and December 31, 2016:



		As of
		March 31,		December 31,
(in millions)	Location in Balance Sheet (1)	2017		2016
Derivative Assets:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current assets	$	55	$	98
Currency hedge contracts	Other long-term assets	36		65
		91		163
Non-Designated Hedging Instruments
Currency hedge contracts	Other current assets	17		36
Total Derivative Assets		$	108	$	199

Derivative Liabilities:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	13	$	3
Currency hedge contracts	Other long-term liabilities	9		4
		22		7
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	27		19
Total Derivative Liabilities		$	49	$	26


(1)	We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2017 and December 31, 2016:



	As of
	March 31, 2017								December 31, 2016
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	2	$	—	$	—	$	2	$	42	$	—	$	—	$	42
Available-for-sale securities	28		—		—		28		20		—		—		20
Currency hedge contracts	—		108		—		108		—		199		—		199
	$	30	$	108	$	—	$	138	$	62	$	199	$	—	$	261
Liabilities
Currency hedge contracts	$	—	$	49	$	—	$	49	$	—	$	26	$	—	$	26
Accrued contingent consideration	—		—		126		126		—		—		204		204
	$	—	$	49	$	126	$	175	$	—	$	26	$	204	$	230