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DERIVATIVES (Tables)
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9 Months Ended |
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Sep. 29, 2013
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| Derivatives |
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| Gains and losses on interest rate swap |
The following table summarizes these gains and losses for the three and nine month periods presented below:
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Three months ended |
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Nine months ended |
In millions |
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September 29, 2013 |
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September 30, 2012 |
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September 29, 2013 |
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September 30, 2012 |
Income Statement
Classification |
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Gain/(Loss) on
Swaps |
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Gain/(Loss) on
Borrowings |
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Gain/(Loss) on
Swaps |
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Gain/(Loss) on
Borrowings |
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Gain/(Loss) on
Swaps |
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Gain/(Loss) on
Borrowings |
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Gain/(Loss) on
Swaps |
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Gain/(Loss) on
Borrowings |
Interest expense |
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$ |
(6 |
) |
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$ |
6 |
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$ |
1 |
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$ |
(1 |
) |
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$ |
(34 |
) |
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$ |
34 |
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$ |
6 |
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$ |
(6 |
) |
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| Location and amounts of gains and losses for derivative instruments classified as cash flow hedges |
The following table summarizes the effect on our Condensed Consolidated Statements of Income for derivative instruments classified as cash flow hedges for the three and nine month periods presented below: The table does not include amounts related to ineffectiveness as it was not material for the periods presented.
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Three months ended |
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Nine months ended |
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Location of
Gain/(Loss)
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Amount of Gain/(Loss)
Recognized in
AOCL on Derivative |
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Amount of Gain/(Loss)
Reclassified from
AOCL into Income |
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Amount of Gain/(Loss)
Recognized in
AOCL on Derivative |
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Amount of Gain/(Loss)
Reclassified from
AOCL into Income |
In millions |
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Reclassified |
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(Effective Portion) |
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(Effective Portion) |
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(Effective Portion) |
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(Effective Portion) |
Derivatives in Cash Flow Hedging Relationships |
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into Income(Effective Portion) |
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September 29,
2013 |
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September 30,
2012 |
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September 29,
2013 |
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September 30,
2012 |
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September 29,
2013 |
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September 30,
2012 |
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September 29,
2013 |
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September 30,
2012 |
Foreign currency forward contracts |
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Net sales |
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$ |
5 |
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$ |
5 |
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$ |
(2 |
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$ |
(1 |
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$ |
(3 |
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$ |
8 |
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$ |
(4 |
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$ |
(3 |
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Commodity swap contracts |
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Cost of sales |
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5 |
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10 |
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(2 |
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(3 |
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(4 |
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13 |
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1 |
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(8 |
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Total |
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$ |
10 |
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$ |
15 |
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$ |
(4 |
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$ |
(4 |
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$ |
(7 |
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$ |
21 |
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$ |
(3 |
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$ |
(11 |
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| Location and amounts of gains and losses for derivative instruments that are not classified as hedges |
The following table summarizes the effect on our Condensed Consolidated Statements of Income for derivative instruments not classified as cash flow hedges for the three and nine month periods presented below:
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Three months ended |
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Nine months ended |
In millions |
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Amount of Gain/(Loss) Recognized in Income on Derivatives |
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Amount of Gain/(Loss) Recognized in Income on Derivatives |
Derivatives Not Designated as
Hedging Instruments |
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Location of Gain/(Loss)
Recognized in Income
on Derivatives |
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September 29,
2013 |
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September 30, 2012 |
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September 29, 2013 |
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September 30, 2012 |
Foreign currency forward contracts |
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Cost of sales |
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$ |
(3 |
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$ |
(1 |
) |
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$ |
— |
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$ |
(4 |
) |
Foreign currency forward contracts |
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Other income (expense), net |
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19 |
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13 |
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(3 |
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18 |
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Commodity swap contracts |
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Cost of sales |
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— |
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2 |
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— |
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1 |
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Commodity zero-cost collars |
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Cost of sales |
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2 |
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1 |
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(2 |
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1 |
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| Location and fair value of derivative instruments |
The following tables summarize the location and fair value of derivative instruments on our Condensed Consolidated Balance Sheets:
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Derivative Assets |
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Fair Value |
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In millions |
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September 29, 2013 |
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December 31, 2012 |
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Balance Sheet Location |
Derivatives designated as hedging instruments |
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Interest rate contract |
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$ |
54 |
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$ |
88 |
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Other assets |
Foreign currency forward contracts |
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4 |
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2 |
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Prepaid expenses and other current assets |
Commodity swap contracts |
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— |
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1 |
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Prepaid expenses and other current assets |
Total derivatives designated as hedging instruments |
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58 |
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91 |
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Derivatives not designated as hedging instruments |
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Foreign currency forward contracts |
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1 |
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1 |
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Prepaid expenses and other current assets |
Commodity call option contracts |
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1 |
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1 |
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Other assets |
Total derivatives not designated as hedging instruments |
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2 |
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2 |
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Total derivative assets |
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$ |
60 |
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$ |
93 |
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Derivative Liabilities |
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Fair Value |
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In millions |
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September 29,
2013 |
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December 31,
2012 |
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Balance Sheet Location |
Derivatives designated as hedging instruments |
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Commodity swap contracts |
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$ |
5 |
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$ |
2 |
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Other accrued expenses |
Total derivatives designated as hedging instruments |
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5 |
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2 |
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Derivatives not designated as hedging instruments |
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Foreign currency forward contracts |
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2 |
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— |
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Other accrued expenses |
Commodity put option contracts |
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1 |
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1 |
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Other accrued expenses |
Total derivatives not designated as hedging instruments |
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3 |
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1 |
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Total derivative liabilities |
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$ |
8 |
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$ |
3 |
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Foreign currency forward contracts
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| Derivatives |
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| Summary of outstanding contracts |
The table below summarizes our outstanding foreign currency forward contracts. Only the U.S. dollar forward contracts are designated and qualify for hedge accounting as of each period presented below. The currencies in this table represent 93 percent and 95 percent of the notional amounts of contracts outstanding as of September 29, 2013 and December 31, 2012, respectively.
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Notional amount in millions |
Currency denomination |
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September 29,
2013 |
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December 31,
2012 |
United States Dollar (USD) |
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105 |
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110 |
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British Pound Sterling (GBP) |
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193 |
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227 |
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Euro (EUR) |
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30 |
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28 |
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Singapore Dollar (SGD) |
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— |
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3 |
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Indian Rupee (INR) |
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3,025 |
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1,943 |
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Japanese Yen (JPY) |
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1,987 |
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384 |
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Canadian Dollar (CAD) |
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65 |
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59 |
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South Korea Won (KRW) |
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32,822 |
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35,266 |
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Chinese Renmimbi (CNY) |
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74 |
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45 |
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Brazilian Real (BRL) |
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92 |
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— |
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Commodity swap contracts
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| Derivatives |
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| Summary of outstanding contracts |
three years.
The following table summarizes our outstanding commodity swap contracts that were entered into to hedge the cost of certain raw material purchases:
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Dollars in millions |
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September 29, 2013 |
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December 31, 2012 |
Commodity |
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Notional Amount |
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Quantity |
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Notional Amount |
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Quantity |
Copper |
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$ |
— |
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— |
(1) |
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$ |
24 |
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3,025 metric tons |
(1) |
Platinum |
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62 |
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41,076 troy ounces |
(2) |
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71 |
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45,126 troy ounces |
(2) |
Palladium |
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18 |
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24,251 troy ounces |
(2) |
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10 |
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14,855 troy ounces |
(2) |
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(1) A metric ton is a measurement of mass equal to 1,000 kilograms.
(2) A troy ounce is a measurement of mass equal to approximately 31 grams.
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Commodity zero cost collars
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| Derivatives |
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| Summary of outstanding contracts |
The following table summarizes our outstanding commodity zero-cost collar contracts that were entered into to hedge the cost of copper purchases:
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September 29, 2013 |
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December 31, 2012 |
Commodity |
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Average Floor
or Cap |
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Quantity in
metric tons (1) |
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Average Floor
or Cap |
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Quantity in
metric tons (1) |
Copper call options |
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$ |
7,852 |
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5,062 |
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$ |
8,196 |
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4,100 |
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Copper put options |
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7,052 |
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5,062 |
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7,005 |
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4,100 |
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(1)A metric ton is a measurement of mass equal to 1,000 kilograms.
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