| Derivative Financial Instruments [Text Block] |
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NOTE 17 : |
DERIVATIVE FINANCIAL INSTRUMENTS |
VOLUME OF DERIVATIVE ACTIVITY
Total gross notional amounts for outstanding derivatives (recorded at fair value) at the end of each period were as follows:
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(In Millions) |
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Dec 28,
2019 |
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Dec 29,
2018 |
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Dec 30,
2017 |
Foreign currency contracts |
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$ |
23,981 |
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$ |
19,223 |
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$ |
19,958 |
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Interest rate contracts |
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14,302 |
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22,447 |
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16,823 |
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Other |
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1,753 |
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1,356 |
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1,636 |
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Total |
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$ |
40,036 |
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$ |
43,026 |
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$ |
38,417 |
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During 2019, we did not enter into any new pay variable or receive fixed interest rate swaps to hedge against changes in the fair value attributable to benchmark interest rates related to our outstanding senior notes. However, we entered into $7.1 billion of such swaps in 2018 and $4.8 billion in 2017. These hedges were designated as fair value hedges. The total notional amount of these swaps was $12.0 billion as of December 28, 2019 and $20.0 billion as of December 29, 2018. During the third quarter of 2019, we unwound $7.1 billion of swaps, resulting in a $111 million gain to be amortized over the remaining life of the debt.
FAIR VALUE OF DERIVATIVE INSTRUMENTS IN THE CONSOLIDATED BALANCE SHEETS
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December 28, 2019 |
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December 29, 2018 |
(In Millions) |
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Assets1
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Liabilities2
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Assets1
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Liabilities2
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Derivatives designated as hedging instruments |
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Foreign currency contracts3
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$ |
56 |
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$ |
159 |
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$ |
44 |
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$ |
244 |
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Interest rate contracts |
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690 |
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9 |
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84 |
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474 |
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Total derivatives designated as hedging instruments |
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746 |
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168 |
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128 |
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718 |
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Derivatives not designated as hedging instruments |
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Foreign currency contracts3
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179 |
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78 |
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132 |
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155 |
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Interest rate contracts |
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11 |
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54 |
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20 |
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22 |
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Equity contracts |
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50 |
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3 |
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— |
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— |
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Total derivatives not designated as hedging instruments |
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240 |
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135 |
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152 |
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177 |
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Total derivatives |
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$ |
986 |
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$ |
303 |
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$ |
280 |
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$ |
895 |
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1 |
Derivative assets are recorded as other assets, current and non-current. |
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2 |
Derivative liabilities are recorded as other liabilities, current and non-current. |
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3 |
The majority of these instruments mature within 12 months.
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AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS
The gross amounts of our derivative instruments and reverse repurchase agreements subject to master netting arrangements with various counterparties, and cash and non-cash collateral posted under such agreements at the end of each period were as follows:
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December 28, 2019 |
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Gross Amounts Not Offset in the Balance Sheet |
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(In Millions) |
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Gross Amounts Recognized |
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Gross Amounts Offset in the Balance Sheet |
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Net Amounts Presented in the Balance Sheet |
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Financial Instruments |
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Cash and Non-Cash Collateral Received or Pledged |
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Net Amount |
Assets: |
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Derivative assets subject to master netting arrangements |
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$ |
974 |
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$ |
— |
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$ |
974 |
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$ |
(144 |
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$ |
(808 |
) |
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$ |
22 |
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Reverse repurchase agreements |
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1,850 |
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— |
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1,850 |
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— |
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(1,850 |
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— |
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Total assets |
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2,824 |
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— |
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2,824 |
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(144 |
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(2,658 |
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22 |
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Liabilities: |
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Derivative liabilities subject to master netting arrangements |
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262 |
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— |
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262 |
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(144 |
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(72 |
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46 |
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Total liabilities |
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$ |
262 |
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$ |
— |
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$ |
262 |
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$ |
(144 |
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$ |
(72 |
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$ |
46 |
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December 29, 2018 |
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Gross Amounts Not Offset in the Balance Sheet |
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(In Millions) |
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Gross Amounts Recognized |
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Gross Amounts Offset in the Balance Sheet |
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Net Amounts Presented in the Balance Sheet |
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Financial Instruments |
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Cash and Non-Cash Collateral Received or Pledged |
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Net Amount |
Assets: |
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Derivative assets subject to master netting arrangements |
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$ |
292 |
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$ |
— |
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$ |
292 |
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$ |
(220 |
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$ |
(72 |
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$ |
— |
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Reverse repurchase agreements |
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2,099 |
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— |
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2,099 |
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— |
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(1,999 |
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100 |
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Total assets |
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2,391 |
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— |
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2,391 |
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(220 |
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(2,071 |
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100 |
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Liabilities: |
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Derivative liabilities subject to master netting arrangements |
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890 |
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— |
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890 |
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(220 |
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(576 |
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94 |
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Total liabilities |
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$ |
890 |
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$ |
— |
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$ |
890 |
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$ |
(220 |
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$ |
(576 |
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$ |
94 |
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We obtain and secure available collateral from counterparties against obligations, including securities lending transactions and reverse repurchase agreements, when we deem it appropriate.
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
The before-tax net gains or losses attributed to the effective portion of cash flow hedges recognized in other comprehensive income (loss) were $11 million net losses in 2019 ($310 million net losses in 2018 and $605 million net gains in 2017). Substantially all of our cash flow hedges are foreign currency contracts for all periods presented.
Amounts excluded from effectiveness testing were insignificant during all periods presented.
For information on the unrealized holding gains (losses) on derivatives reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income, see "Note 16: Other Comprehensive Income (Loss)."
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
The effects of derivative instruments designated as fair value hedges, recognized in interest and other, net for each period were as follows:
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Gains (Losses)
Recognized in Statement of Income on
Derivatives
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Years Ended (In Millions) |
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Dec 28,
2019 |
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Dec 29,
2018 |
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Dec 30,
2017 |
Interest rate contracts |
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$ |
1,071 |
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$ |
(138 |
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$ |
(68 |
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Hedged items |
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(1,071 |
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138 |
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68 |
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Total |
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$ |
— |
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$ |
— |
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$ |
— |
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The amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges for each period were as follows:
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Line Item in the Consolidated Balance Sheet in Which the Hedged Item Is Included |
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Carrying Amount of the Hedged Item Asset/(Liabilities) |
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Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities) |
Years Ended
(In Millions) |
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Dec 28,
2019 |
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Dec 29,
2018 |
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Dec 28,
2019 |
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Dec 29,
2018 |
Long-term debt |
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$ |
(12,678 |
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$ |
(19,622 |
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$ |
(681 |
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$ |
390 |
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DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The effects of derivative instruments not designated as hedging instruments on the Consolidated Statements of Income for each period were as follows:
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Years Ended (In Millions) |
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Location of Gains (Losses)
Recognized in Income on Derivatives
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Dec 28,
2019 |
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Dec 29,
2018 |
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Dec 30,
2017 |
Foreign currency contracts |
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Interest and other, net |
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$ |
204 |
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$ |
372 |
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$ |
(547 |
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Interest rate contracts |
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Interest and other, net |
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(32 |
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9 |
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9 |
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Other |
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Various |
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297 |
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(147 |
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203 |
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Total |
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$ |
469 |
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$ |
234 |
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$ |
(335 |
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