Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

The Company is exposed to certain market risks that exist as part of its ongoing business operations, including fluctuations in currency exchange rates, price volatility for certain commodities and changes in interest rates. The Company does not engage in speculative or leveraged transactions and does not hold or issue financial instruments for trading purposes.

Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the fair value of the Company’s fixed rate debt. The following table presents the Company’s fixed rate debt for which the fair value is subject to changing market interest rates:



	0.90% Notes Due		1.95% Notes Due		6.25% Notes Due		4.88% Notes Due thru		3.375% Notes Due		1.75% Euro Notes Due		1.25% Euro Notes Due		3.50% Notes Due		2.65% Notes Due		2.125% Euro Notes Due		3.00% Euro Notes Due		4.875% Notes Due		3.9% Notes Due
In millions	Feb 25, 2017		Mar 1, 2019		Apr 1, 2019		Dec 31, 2020		Sep 15, 2021		May 20, 2022		May 22, 2023		Mar 1, 2024		Nov 15, 2026		May 22, 2030		May 19, 2034		Sep 15, 2041		Sep 1, 2042
As of December 31, 2016:
Estimated cash outflow by year of principal maturity
2017	$	650	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2018	—		—		—		—		—		—		—		—		—		—		—		—		—
2019	—		650		700		—		—		—		—		—		—		—		—		—		—
2020	—		—		—		4		—		—		—		—		—		—		—		—		—
2021	—		—		—		—		350		—		—		—		—		—		—		—		—
2022 and thereafter	—		—		—		—				526		526		700		1,000		526		526		650		1,100
Estimated fair value	650		656		768		4		365		565		549		728		959		565		618		734		1,114
Carrying value	650		648		698		4		348		520		520		695		991		519		512		636		1,080

As of December 31, 2015:
Estimated total cash outflow	$	650	$	650	$	700	$	4	$	350	$	543	$	543	$	700	$	—	$	543	$	543	$	650	$	1,100
Estimated fair value	649		655		790		4		362		564		538		727		—		530		569		708		1,051
Carrying value	649		647		698		4		347		536		536		695		—		536		528		635		1,080

Foreign Currency Risk

The Company operates in the U.S. and 56 foreign countries. The funding for the foreign manufacturing operations is provided primarily through the permanent investment of equity capital. The Company’s products are typically manufactured and sold within the same country. Therefore, the Company's manufacturing operations generally do not have significant assets or liabilities denominated in currencies other than their functional currencies.

The Company designated €1.0 billion of Euro notes issued in May 2014 and €1.0 billion of Euro notes issued in May 2015 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations. Changes in the value of this debt resulting from fluctuations in the Euro to U.S. Dollar exchange rate have been recorded as foreign currency translation adjustments within Accumulated other

comprehensive income (loss). The cumulative unrealized gain recorded in Accumulated other comprehensive income (loss) related to the net investment hedge was $375 million and $308 million as of December 31, 2016 and December 31, 2015, respectively.

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