Quarterly report pursuant to Section 13 or 15(d)

DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)

v3.19.1
DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)
 3 Months Ended
Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]  
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block] Income Statement and AOCI Recognition
The following table indicates the amount of gains and losses that have been recognized in the income statement for the fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the three months ended March 31, 2019 and 2018 (in millions):


 
March 31, 2019
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
 
Revenue
 
Interest Expense
 
Investment Income and Other
Gain or (loss) on fair value hedging relationships:
 
 
 
 
 
 
Interest Contracts:
 
 
 
 
 
 
Hedged items
 
$
—

 
$
(15
)
 
$
—

Derivatives designated as hedging instruments
 
—

 
15

 
—

Gains or (loss) on cash flow hedging relationships:
 
 
 
 
 
 
Interest Contracts:
 
 
 
 
 
 
Amount of gain or (loss) reclassified from accumulated other comprehensive income
 
—

 
(6
)
 
—

Foreign Exchange Contracts:
 
 
 
 
 
 
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income
 
23

 
—

 
—

Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded
 
$
23

 
$
(6
)
 
$
—



 
March 31, 2018
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
 
Revenue
 
Interest Expense
 
Investment Income and Other
Gain or (loss) on fair value hedging relationships:
 
 
 
 
 
 
Interest Contracts:
 
 
 
 
 
 
Hedged items
 
$
—

 
$
54

 
$
—

Derivatives designated as hedging instruments
 
—

 
(54
)
 
—

Gains or (loss) on cash flow hedging relationships:
 
 
 
 
 
 
Interest Contracts:
 
 
 
 
 
 
Amount of gain or (loss) reclassified from accumulated other comprehensive income
 
—

 
(6
)
 
—

Foreign Exchange Contracts:
 
 
 
 
 
 
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income
 
(42
)
 
—

 
—

Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded
 
$
(42
)
 
$
(6
)
 
$
—

Schedule of Notional Amounts of Outstanding Derivative Positions As of March 31, 2019 and December 31, 2018, the notional amounts of our outstanding derivative positions were as follows (in millions):
 
March 31, 2019
 
December 31, 2018
Currency hedges:
 
 
 
 
 
Euro
EUR
4,784

 
EUR
4,924

British Pound Sterling
GBP
1,905

 
GBP
2,037

Canadian Dollar
CAD
1,455

 
CAD
1,443

Hong Kong Dollar
HKD
3,707

 
HKD
3,642

Singapore Dollar
SGD
—

 
SGD
20

 
 
 
 
 
 
Interest rate hedges:
 
 
 
 
 
Fixed to Floating Interest Rate Swaps
USD
4,674

 
USD
4,674

Floating to Fixed Interest Rate Swaps
USD
778

 
USD
778

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of March 31, 2019 and December 31, 2018 (in millions).
 
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedge Adjustments
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedge Adjustments
Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included
 
March 31, 2019
 
March 31, 2019
 
December 31, 2018
 
December 31, 2018
Current maturities of long-term debt, commercial paper and finance leases
 
$
1,000

 
$
—

 
$
—

 
$
—

Long-term debt and finance leases
 
3,218

 
27

 
4,207

 
16

 
 
 
Fair Value Hierarchy Level
 
Gross Amounts Presented in
Consolidated Balance Sheets
 
Net Amounts if Right of
Offset had been Applied
Asset Derivatives
Balance Sheet Location
 
 
March 31,
2019
 
December 31,
2018
 
March 31,
2019
 
December 31,
2018
Derivatives designated as hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
$
122

 
$
90

 
$
117

 
$
83

Interest rate contracts
Other current assets
 
Level 2
 
—

 
1

 
—

 
1

Foreign exchange contracts
Other non-current assets
 
Level 2
 
277

 
230

 
270

 
215

Interest rate contracts
Other non-current assets
 
Level 2
 
16

 
14

 
10

 
6

Derivatives not designated as hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
Other current assets
 
Level 2
 
2

 
7

 
1

 
5

Foreign exchange contracts
Other non-current assets
 
Level 2
 
—

 
1

 
—

 
1

Interest rate contracts
Other non-current assets
 
Level 2
 
16

 
18

 
16

 
18

Total Asset Derivatives
 
 
 
 
$
433

 
$
361

 
$
414

 
$
329


 
 
 
Fair Value Hierarchy Level
 
Gross Amounts Presented in
Consolidated Balance Sheets
 
Net Amounts if Right of
Offset had been Applied
Liability Derivatives
Balance Sheet Location
 
 
March 31,
2019
 
December 31,
2018
 
March 31,
2019
 
December 31,
2018
Derivatives designated as hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
Other current liabilities
 
Level 2
 
$
5

 
$
7

 
$
—

 
$
—

Foreign exchange contracts
Other non-current liabilities
 
Level 2
 
7

 
15

 
—

 
—

Interest rate contracts
Other non-current liabilities
 
Level 2
 
26

 
41

 
20

 
33

Derivatives not designated as hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
Other current liabilities
 
Level 2
 
1

 
3

 
—

 
1

Foreign exchange contracts
Other non-current liabilities
 
Level 2
 
—

 
1

 
—

 
1

Total Liability Derivatives
 
 
 
 
$
39

 
$
67

 
$
20

 
$
35

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) The following table indicates the amount of gains and losses that have been recognized in AOCI within foreign currency translation adjustment for the three months ended March 31, 2019 and 2018 for those instruments designated as net investment hedges (in millions):
Three Months Ended March 31:
 
 
 
 
Non-derivative Instruments in Net Investment Hedging Relationships
 
Amount of Gain (Loss) Recognized in AOCI on Debt
 
2019
 
2018
Foreign denominated debt
 
$
73

 
$
(80
)
Total
 
$
73

 
$
(80
)
The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the three months ended March 31, 2019 and 2018 for those derivatives designated as cash flow hedges (in millions):
Three Months Ended March 31:
 
 
 
 
Derivative Instruments in Cash Flow Hedging Relationships
 
Amount of Gain (Loss) Recognized in AOCI on Derivative
 
2019
 
2018
Interest rate contracts
 
$
13

 
$
1

Foreign exchange contracts
 
104

 
(136
)
Total
 
$
117

 
$
(135
)
 
 
 
 
 
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps, foreign currency forward and investment market price forward contracts not designated as hedges for the three months ended March 31, 2019 and 2018 (in millions):
Derivative Instruments Not Designated in
Hedging Relationships
Location of Gain (Loss)
Recognized in Income
 
Amount of Gain (Loss)
Recognized in Income
 
2019
 
2018
Three Months Ended March 31:
 
 
 
 
 
Interest rate contracts
Interest expense
 
$
(2
)
 
$
(2
)
Foreign exchange contracts
Investment income and other
 
(1
)
 
8

Investment market price contracts
Investment income and other
 
—

 
16

Total
 
 
$
(3
)
 
$
22