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Derivative Instruments
 3 Months Ended
Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments DERIVATIVE INSTRUMENTSWe use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency
exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential credit loss in the event of nonperformance by our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2021.
Foreign Currency Hedges
March 2022Cash FlowNet InvestmentNon-DesignatedTotal
Gross notional amount$711 $2,224 $3,993 $6,928 
Maximum term in years4.6
Fair value:
Other current assets$16 $49 $33 $98 
Other noncurrent assets1 74 — 75 
Other current liabilities(7)— (29)(36)
Other noncurrent liabilities(1)— — (1)
Total fair value$9 $123 $4 $136 
December 2021Cash FlowNet InvestmentNon-DesignatedTotal
Gross notional amount$973 $2,266 $5,512 $8,751 
Maximum term in years4.9
Fair value:
Other current assets$15 $39 $92 $146 
Other noncurrent assets1 65 — 66 
Other current liabilities(7)— (10)(17)
Total fair value$9 $104 $82 $195 
We had €2.0 billion at March 31, 2022 and December 31, 2021 in certain foreign currency forward contracts designated as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. In addition to these derivative financial instruments designated as net investment hedges, we had €4.4 billion at March 31, 2022 and December 31, 2021 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries.
On March 31, 2022 the total after tax gain (loss) in AOCI related to designated net investment hedges was $42.
Net Currency Exchange Rate Gains (Losses)
DerivativeThree Months
instrument:Recorded in:20222021
Cash FlowCost of sales$— $(1)
Net InvestmentOther income (expense), net11 8 
Non-DesignatedOther income (expense), net1 (2)
Total$12 $5 
Pretax gains (losses) on derivatives designated as cash flow hedges of $13 and net investment hedges of $34 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months as of March 31, 2022. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the
component related to the spot-forward difference from the effectiveness assessment.
Interest Rate Hedges
Pretax gains of $5 recorded in AOCI related to other interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense), net in earnings within 12 months of March 31, 2022. The cash flow effect of interest rate hedges is recorded in cash flow from operations.