v3.24.3
Derivative Financial Instruments and Hedging Activities (Notes)
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended September 30 were as follows (in millions):
 Third QuarterFirst Nine Months
Cash flow hedges
2023202420232024
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$21 $16 $111 $80 
Commodity contracts (b)
(18)(11)(42)(40)
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
(137)(92)(407)(294)
Fair value changes on hedging instruments(219)585 (285)316 
Fair value changes on hedged debt210 (553)223 (316)
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(23)(33)(56)(97)
Fair value changes on hedging instruments(46)266 (48)155 
Fair value changes on hedged debt44 (261)47 (159)
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)22 133 44 328 
Cross-currency interest rate swap contracts
(137)210 (112)14 
Interest rate contracts28 (153)125 (102)
Commodity contracts(4)— (60)(11)
Total$(259)$107 $(460)$(126)
__________
(a)For the third quarter and first nine months of 2023, a $372 million gain and a $19 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2024, a $388 million loss and a $51 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the third quarter and first nine months of 2023, a $58 million gain and a $42 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2024, an $11 million gain and a $33 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the third quarter and first nine months of 2023, a $37 million loss and a $14 million gain, respectively, were reported in Cost of sales, and a $59 million gain and a $30 million gain, respectively, were reported in Other income/(loss), net. For the third quarter and first nine months of 2024, a $138 million gain and a $196 million gain, respectively, were reported in Cost of sales, and a $5 million loss and a $132 million gain, respectively, were reported in Other income/(loss), net.
NOTE 13. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2023September 30, 2024
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$19,530 $69 $385 $19,656 $24 $430 
Commodity contracts983 23 36 957 55 3 
Fair value hedges
Interest rate contracts12,119 106 633 15,029 329 382 
Cross-currency interest rate swap contracts
2,078 69 104 3,802 212 76 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts22,802 201 261 21,316 188 132 
Cross-currency interest rate swap contracts
7,100 119 252 5,648 254 132 
Interest rate contracts73,134 465 1,036 78,632 419 995 
Commodity contracts1,051 35 31 987 27 38 
Total derivative financial instruments, gross (a) (b)
$138,797 $1,087 $2,738 $146,027 $1,508 $2,188 
Current portion
$493 $1,464 $356 $1,209 
Non-current portion
594 1,274 1,152 979 
Total derivative financial instruments, gross
$1,087 $2,738 $1,508 $2,188 
__________
(a)At December 31, 2023 and September 30, 2024, we held collateral of $40 million and $35 million, respectively, and we posted collateral of $185 million and $145 million, respectively.
(b)At December 31, 2023 and September 30, 2024, the fair value of assets and liabilities available for counterparty netting was $815 million and $1,030 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.