v3.20.4
Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2020
Financial Instruments [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy, using a Market Approach:
As of December 31, 2020As of December 31, 2019
(MILLIONS OF DOLLARS)TotalLevel 1Level 2TotalLevel 1Level 2
Financial assets:
Short-term investments
Classified as equity securities with readily determinable fair values:
Money market funds$567 $— $567 $705 $— $705 
Classified as available-for-sale debt securities:
Government and agency—non-U.S.7,719 — 7,719 4,863 — 4,863 
Government and agency—U.S.982 — 982 811 — 811 
Corporate and other1,008 — 1,008 1,013 — 1,013 
9,709 — 9,709 6,687 — 6,687 
Total short-term investments10,276 — 10,276 7,392 — 7,392 
Other current assets
Derivative assets:
Interest rate contracts18 — 18 53 — 53 
Foreign exchange contracts234 — 234 413 — 413 
Total other current assets251 — 251 465 — 465 
Long-term investments
Classified as equity securities with readily determinable fair values(a)
2,809 2,776 32 1,902 1,863 39 
Classified as available-for-sale debt securities:
Government and agency—non-U.S.6 — 6 — — — 
Government and agency—U.S.121 — 121 303 — 303 
Corporate and other— — — 11 — 11 
128 — 128 315 — 315 
Total long-term investments2,936 2,776 160 2,216 1,863 354 
Other noncurrent assets
Derivative assets:
Interest rate contracts117 — 117 266 — 266 
Foreign exchange contracts5 — 5 261 — 261 
Total derivative assets122 — 122 526 — 526 
Insurance contracts(b)
693 — 693 575 — 575 
Total other noncurrent assets814 — 814 1,102 — 1,102 
Total assets$14,278 $2,776 $11,501 $11,176 $1,863 $9,313 
Financial liabilities:
Other current liabilities
Derivative liabilities:
Foreign exchange contracts$501 $— $501 $114 $— $114 
Total other current liabilities501 — 501 114 — 114 
Other noncurrent liabilities
Derivative liabilities:
Foreign exchange contracts599 — 599 604 — 604 
Total other noncurrent liabilities599 — 599 604 — 604 
Total liabilities$1,100 $— $1,100 $718 $— $718 
(a)Long-term equity securities of $190 million as of December 31, 2020 and $176 million as of December 31, 2019 were held in restricted trusts for employee benefit plans.
(b)Includes life insurance policies held in restricted trusts for U.S. non-qualified employee benefit plans. The underlying invested assets in these contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions—net (see Note 4).
Financial Liabilities Not Measured at Fair Value on a Recurring Basis
Carrying values and estimated fair values using a market approach:
As of December 31, 2020As of December 31, 2019
Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
(MILLIONS OF DOLLARS)TotalLevel 2TotalLevel 2
Financial Liabilities
Long-term debt, excluding the current portion$37,133 $45,533 $45,533 $35,955 $40,842 $40,842 
Summary of Investments
The following summarizes our investments by classification type:
As of December 31,
(MILLIONS OF DOLLARS)20202019
Short-term investments
Equity securities with readily determinable fair values(a)
$567 $705 
Available-for-sale debt securities9,709 6,687 
Held-to-maturity debt securities161 1,133 
Total Short-term investments$10,437 $8,525 
Long-term investments
Equity securities with readily determinable fair values$2,809 $1,902 
Available-for-sale debt securities128 315 
Held-to-maturity debt securities37 42 
Private equity securities at cost(b)
432 756 
Total Long-term investments
$3,406 $3,014 
Equity-method investments16,856 17,133 
Total long-term investments and equity-method investments
$20,262 $20,147 
Held-to-maturity cash equivalents$89 $163 
(a)As of December 31, 2020 and 2019, includes money market funds primarily invested in U.S. Treasury and government debt.
(b)Represent investments in the life sciences sector.
Contractual Maturities of Available-for-sale and Held-to-maturity Securities
At December 31, 2020, our investment securities portfolio consisted of diverse, primarily investment-grade, debt securities. The contractual maturities, or estimated maturities, of the debt securities are as follows:
As of December 31, 2020As of December 31, 2019
Gross UnrealizedMaturities (in Years)Gross Unrealized
(MILLIONS OF DOLLARS)Amortized CostGainsLossesFair ValueWithin 1Over 1
to 5		Over 5Amortized CostGainsLossesFair Value
Available-for-sale debt securities
Government and agency––non-U.S.
$7,593 $136 $(4)$7,725 $7,719 $6 $— $4,895 $6 $(38)$4,863 
Government and agency––U.S.
1,104 — (1)1,103 982 121 — 1,120 — (6)1,114 
Corporate and other(a)
1,006 2 — 1,008 1,008 — — 1,027 — (2)1,025 
Held-to-maturity debt securities
Time deposits and other
283 — — 283 251 9 24 535 — — 535 
Government and agency––non-U.S.
5 — — 5 — — 5 803 — — 803 
Total debt securities$9,991 $138 $(5)$10,124 $9,959 $136 $29 $8,380 $6 $(47)$8,340 
(a)Primarily issued by a diverse group of corporations.
Schedule of Available-for-sale Securities Reconciliation
At December 31, 2020, our investment securities portfolio consisted of diverse, primarily investment-grade, debt securities. The contractual maturities, or estimated maturities, of the debt securities are as follows:
As of December 31, 2020As of December 31, 2019
Gross UnrealizedMaturities (in Years)Gross Unrealized
(MILLIONS OF DOLLARS)Amortized CostGainsLossesFair ValueWithin 1Over 1
to 5		Over 5Amortized CostGainsLossesFair Value
Available-for-sale debt securities
Government and agency––non-U.S.
$7,593 $136 $(4)$7,725 $7,719 $6 $— $4,895 $6 $(38)$4,863 
Government and agency––U.S.
1,104 — (1)1,103 982 121 — 1,120 — (6)1,114 
Corporate and other(a)
1,006 2 — 1,008 1,008 — — 1,027 — (2)1,025 
Held-to-maturity debt securities
Time deposits and other
283 — — 283 251 9 24 535 — — 535 
Government and agency––non-U.S.
5 — — 5 — — 5 803 — — 803 
Total debt securities$9,991 $138 $(5)$10,124 $9,959 $136 $29 $8,380 $6 $(47)$8,340 
(a)Primarily issued by a diverse group of corporations.
Held-to-maturity Securities
At December 31, 2020, our investment securities portfolio consisted of diverse, primarily investment-grade, debt securities. The contractual maturities, or estimated maturities, of the debt securities are as follows:
As of December 31, 2020As of December 31, 2019
Gross UnrealizedMaturities (in Years)Gross Unrealized
(MILLIONS OF DOLLARS)Amortized CostGainsLossesFair ValueWithin 1Over 1
to 5		Over 5Amortized CostGainsLossesFair Value
Available-for-sale debt securities
Government and agency––non-U.S.
$7,593 $136 $(4)$7,725 $7,719 $6 $— $4,895 $6 $(38)$4,863 
Government and agency––U.S.
1,104 — (1)1,103 982 121 — 1,120 — (6)1,114 
Corporate and other(a)
1,006 2 — 1,008 1,008 — — 1,027 — (2)1,025 
Held-to-maturity debt securities
Time deposits and other
283 — — 283 251 9 24 535 — — 535 
Government and agency––non-U.S.
5 — — 5 — — 5 803 — — 803 
Total debt securities$9,991 $138 $(5)$10,124 $9,959 $136 $29 $8,380 $6 $(47)$8,340 
(a)Primarily issued by a diverse group of corporations.
Schedule of Gains and Losses on Investment Securities
The following presents the calculation of the portion of unrealized (gains)/losses that relate to equity securities, excluding equity method investments, held at the reporting date:
Year Ended December 31,
(MILLIONS OF DOLLARS)202020192018
Net (gains)/losses recognized during the period on equity securities(a)
$(540)$(454)$(586)
Less: Net (gains)/losses recognized during the period on equity securities sold during the period(24)(25)(109)
Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)
$(515)$(429)$(477)
(a)Reported in Other (income)/deductions––net. See Note 4.
(b)Included in net unrealized gains are observable price changes on equity securities without readily determinable fair values. Since January 1, 2018, there were cumulative impairments and downward adjustments of $81 million and upward adjustments of $61 million. Impairments, downward and upward adjustments were not significant in 2020, 2019 and 2018.
Schedule of Short-term Borrowings
Short-term borrowings include:
As of December 31,
(MILLIONS OF DOLLARS)20202019
Commercial paper(a)
$556 $13,915 
Current portion of long-term debt, principal amount(b)
2,004 1,458 
Other short-term borrowings, principal amount(c)
145 860 
Total short-term borrowings, principal amount
2,705 16,233 
Net fair value adjustments related to hedging and purchase accounting— 5 
Net unamortized discounts, premiums and debt issuance costs(2)(43)
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted
$2,703 $16,195 
(a)See Note 2B.
(b)See Note 7D.
(c)Primarily includes cash collateral. See Note 7F.
Schedule of Long-term Debt Instruments
The following outlines our senior unsecured long-term debt and the weighted-average stated interest rate by maturity:
As of December 31,
(MILLIONS OF DOLLARS)20202019
Notes due 2021 (2.4% for 2019)(a)
$— $3,153 
Notes due 2022 (1.0% for 2020 and 2019)
1,728 1,624 
Notes due 2023 (3.2% for 2020 and 3.7% for 2019)
2,550 2,892 
Notes due 2024 (3.9% for 2020 and 2019)
2,250 2,250 
Notes due 2025 (0.8% for 2020)
750 — 
Notes due 2026 (2.9% for 2020 and 2019)
3,000 3,000 
Notes due 2027-2030 (3.1% for 2020 and 3.6% for 2019)
6,781 4,453 
Notes due 2034-2036 (5.3% for 2020 and 2019)
2,250 2,250 
Notes due 2037-2040 (5.6% for 2020 and 6.0% for 2019)
8,086 7,066 
Notes due 2043-2046 (3.7% for 2020 and 2019)
4,878 4,818 
Notes due 2047-2050 (3.6% for 2020 and 4.1% for 2019)
3,500 3,315 
Total long-term debt, principal amount35,774 34,820 
Net fair value adjustments related to hedging and purchase accounting1,562 1,305 
Net unamortized discounts, premiums and debt issuance costs(207)(176)
Other long-term debt4 5 
Total long-term debt, carried at historical proceeds, as adjusted$37,133 $35,955 
Current portion of long-term debt, carried at historical proceeds, as adjusted (not included above (2.6% and 1.2%))
$2,002 $1,462 
(a) Reclassified to the current portion of long-term debt.
Our long-term debt outlined in the above table is generally redeemable by us at any time at varying redemption prices plus accrued and unpaid interest.
Issuances
In 2020, we issued the following:
(MILLIONS OF DOLLARS)Principal
Interest RateMaturity DateAs of
December 31, 2020
0.800%(a)
May 28, 2025$750 
1.700%(a)
May 28, 20301,000 
2.550%(a)
May 28, 20401,000 
2.700%(a)
May 28, 20501,250 
$4,000 
2.625%(b)
April 1, 2030$1,250 
(a)May be redeemed by us at any time, in whole, or in part, at varying redemption prices plus accrued and unpaid interest. The weighted-average effective interest rate for the notes at issuance was 2.11%.
(b)May be redeemed by us at any time, in whole, or in part, at a redemption price plus accrued and unpaid interest. The weighted average effective interest rate for the notes at issuance was 2.67%.
Schedule of Derivative Financial Instruments
The following summarizes the fair value of the derivative financial instruments and the related notional amounts (including those reported as part of discontinued operations):
(MILLIONS OF DOLLARS)As of December 31, 2020As of December 31, 2019
Fair ValueFair Value
NotionalAssetLiabilityNotionalAssetLiability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$24,369 $145 $1,005 $25,193 $591 $662 
Interest rate contracts
1,950 135 — 6,645 318 — 
280 1,005 909 662 
Derivatives not designated as hedging instruments:
Foreign exchange contracts
$15,063 94 95 $19,623 82 55 
Total$373 $1,100 $992 $718 
(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $5.0 billion as of December 31, 2020 and $5.9 billion as of December 31, 2019
Schedule of Derivative Assets at Fair Value
The following summarizes the fair value of the derivative financial instruments and the related notional amounts (including those reported as part of discontinued operations):
(MILLIONS OF DOLLARS)As of December 31, 2020As of December 31, 2019
Fair ValueFair Value
NotionalAssetLiabilityNotionalAssetLiability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$24,369 $145 $1,005 $25,193 $591 $662 
Interest rate contracts
1,950 135 — 6,645 318 — 
280 1,005 909 662 
Derivatives not designated as hedging instruments:
Foreign exchange contracts
$15,063 94 95 $19,623 82 55 
Total$373 $1,100 $992 $718 
(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $5.0 billion as of December 31, 2020 and $5.9 billion as of December 31, 2019
Schedule of Derivative Liabilities at Fair Value
The following summarizes the fair value of the derivative financial instruments and the related notional amounts (including those reported as part of discontinued operations):
(MILLIONS OF DOLLARS)As of December 31, 2020As of December 31, 2019
Fair ValueFair Value
NotionalAssetLiabilityNotionalAssetLiability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$24,369 $145 $1,005 $25,193 $591 $662 
Interest rate contracts
1,950 135 — 6,645 318 — 
280 1,005 909 662 
Derivatives not designated as hedging instruments:
Foreign exchange contracts
$15,063 94 95 $19,623 82 55 
Total$373 $1,100 $992 $718 
(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $5.0 billion as of December 31, 2020 and $5.9 billion as of December 31, 2019
Schedule of Gains/(Losses) Incurred to Hedge or Offset Operational Foreign Exchange or Interest Rate Risk
The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk (including gains/(losses) reported as part of discontinued operations).
 
Amount of
Gains/(Losses)
Recognized in OID(a)
Amount of Gains/(Losses)
Recognized in OCI(a)
Amount of Gains/(Losses)
Reclassified from
OCI into OID and COS(a)
As of December 31,
(MILLIONS OF DOLLARS)202020192020201920202019
Derivative Financial Instruments in Cash Flow Hedge Relationships:
      
Foreign exchange contracts(b)
$— $— $(649)$339 $(77)$525 
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach(c)
— — 55 136 57 140 
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts
369 900 — — — — 
Hedged item
(369)(900)— — — — 
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts— — (501)(313)— — 
The portion on foreign exchange contracts excluded from the assessment of hedge effectiveness(c)
— — 181 188 154 144 
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign currency short-term borrowings— — 8 34 — — 
Foreign currency long-term debt(d)
— — (183)36 — — 
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts178 (172)— — — — 
All other net(c)
— — 12 — (1)(1)
$178 $(172)$(1,077)$421 $133 $808 
(a)OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the consolidated statements of income. OCI = Other comprehensive income/(loss), included in the consolidated statements of comprehensive income.
(b)The amounts reclassified from OCI into COS were:
•a net gain of $172 million in 2020 (including a gain of $22 million reported in Income from discontinued operations––net of tax); and
•a net gain of $247 million in 2019 (including a gain of $46 million reported in Income from discontinued operations––net of tax).
The remaining amounts were reclassified from OCI into OID. Based on year-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax loss of $341 million within the next 12 months into income. The maximum length of time over which we are hedging future foreign exchange cash flow relates to our $1.8 billion U.K. pound debt maturing in 2043.
(c)The amounts reclassified from OCI were reclassified into OID.
(d)Long-term debt includes foreign currency borrowings with carrying values of $2.1 billion as of December 31, 2020, which are used as hedging instruments in net investment hedge relationships.
Schedule of Amounts Recorded In Balance Sheet Related to Cumulative Adjustments for Fair Value Hedges
The following summarizes the amounts recorded in our consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
As of December 31, 2020As of December 31, 2019
Cumulative Amount of Fair
Value Hedging Adjustment
Increase/(Decrease) to
Carrying Amount		Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount
(MILLIONS OF DOLLARS)
Carrying Amount of Hedged Assets/Liabilities(a)
Active
Hedging
Relationships		Discontinued Hedging Relationships
Carrying Amount of Hedged Assets/Liabilities(a)
Active Hedging RelationshipsDiscontinued Hedging Relationships
Long-term debt$2,016 $117 $1,149 $7,092 $266 $690 
(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments.
Schedule of Amounts Recorded In Balance Sheet Related to Cumulative Adjustments for Cash Flow Hedges
The following summarizes the amounts recorded in our consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
As of December 31, 2020As of December 31, 2019
Cumulative Amount of Fair
Value Hedging Adjustment
Increase/(Decrease) to
Carrying Amount		Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount
(MILLIONS OF DOLLARS)
Carrying Amount of Hedged Assets/Liabilities(a)
Active
Hedging
Relationships		Discontinued Hedging Relationships
Carrying Amount of Hedged Assets/Liabilities(a)
Active Hedging RelationshipsDiscontinued Hedging Relationships
Long-term debt$2,016 $117 $1,149 $7,092 $266 $690 
(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments.