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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position

The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the years ended December 31, 2020 and 2019 (in millions):

						2020																		2019
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships						Revenue						Interest Expense						Investment Income and Other						Revenue						Interest Expense						Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items						$	—					$	(8)					$	—					$	—					$	(38)					$	—
Derivatives designated as hedging instruments						—						8						—						—						38						—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income						—						(8)						—						—						(15)						—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income						196						—						—						177						—						—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded						$	196					$	(8)					$	—					$	177					$	(15)					$	—

Notional Amounts of Outstanding Derivative Positions

The notional amounts of our outstanding derivative positions were as follows as of December 31, 2020 and 2019 (in millions):

									2020						2019
Currency hedges:
Euro			EUR						4,197						4,571
British Pound Sterling			GBP						1,400						1,494
Canadian Dollar			CAD						1,576						1,402
Hong Kong Dollar			HKD						3,717						3,327
Interest rate hedges:
Fixed to Floating Interest Rate Swaps			USD						3,250						3,674
Floating to Fixed Interest Rate Swaps			USD						778						778

Balance sheet location of derivative assets and liabilities and their related fair values

The following table indicates the location in the consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.

We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in the consolidated balance sheets. The columns labeled "Net Amounts if Right of Offset had been Applied" indicate the potential net fair value positions by type of contract and location in the consolidated balance sheets had we elected to apply the right of offset as of December 31, 2020 and December 31, 2019 (in millions):

																		Fair Value Hierarchy Level						Gross Amounts Presented in Consolidated Balance Sheets												Net Amounts if Right of Offset had been Applied
Asset Derivatives						Balance Sheet  Location																		2020						2019						2020						2019
Derivatives designated as hedges:
Foreign currency exchange contracts						Other current assets												Level 2						$	56					$	138					$	45					$	131
Interest rate contracts						Other current assets												Level 2						2						2						2						2
Foreign currency exchange contracts						Other non-current assets												Level 2						35						252						4						236
Interest rate contracts						Other non-current assets												Level 2						29						21						26						20
Derivatives not designated as hedges:
Foreign currency exchange contracts						Other current assets												Level 2						4						7						4						7
Interest rate contracts						Other non-current assets												Level 2						—						12						—						11
Total Asset Derivatives																								$	126					$	432					$	81					$	407

																		Fair Value Hierarchy Level						Gross Amounts Presented in Consolidated Balance Sheets												Net Amounts if Right of Offset had been Applied
Liability Derivatives						Balance Sheet Location																		2020						2019						2020						2019
Derivatives designated as hedges:
Foreign currency exchange contracts						Other current liabilities												Level 2						$	34					$	7					$	23					$	—
Foreign currency exchange contracts						Other non-current liabilities												Level 2						142						16						111						—
Interest rate contracts						Other non-current liabilities												Level 2						13						11						10						10
Derivatives not designated as hedges:
Foreign currency exchange contracts						Other current liabilities												Level 2						2						—						2						—
Interest rate contracts						Other current liabilities																		1						—						1						—
Interest rate contracts						Other non-current liabilities												Level 2						—						3						—						2
Total Liability Derivatives																								$	192					$	37					$	147					$	12

The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of December 31, 2020 and 2019 (in millions):

						2020												2019
Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included						Carrying Amount of Hedged Liabilities						Cumulative Amount of Fair Value Hedge Adjustments						Carrying Amount of Hedged Liabilities						Cumulative Amount of Fair Value Hedge Adjustments
Long-Term Debt and Finance Leases						$	2,816					$	42					$	3,234					$	40

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the years ended December 31, 2020 and 2019 for those derivatives designated as cash flow hedges (in millions):

Derivative Instruments in Cash Flow Hedging Relationships						Amount of Gain (Loss) Recognized in AOCI on Derivatives
						2020						2019
Interest rate contracts						$	—					$	6
Foreign currency exchange contracts						(253)						250
Total						$	(253)					$	256

The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency translation adjustment for the years ended December 31, 2020 and 2019 for those instruments designated as net investment hedges (in millions):

Non-derivative Instruments in Net Investment Hedging Relationships						Amount of Gain (Loss) Recognized in AOCI on Debt
						2020						2019
Foreign denominated debt						$	(265)					$	75
Total						$	(265)					$	75

Not Designated as Hedging Instrument

Amount and Location in the Income Statement for Derivatives Designated as Fair Value Hedges

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of these interest rate swaps, foreign currency forward and investment market price forward contracts not designated as hedges for the years ended December 31, 2020 and 2019 (in millions):

Derivative Instruments Not Designated in Hedging Relationships						Location of Gain (Loss) Recognized in Income						Amount of Gain (Loss) Recognized in Income
												2020						2019
Interest rate contracts						Interest expense						$	(9)					$	(9)
Foreign currency exchange contracts						Investment income and other						27						(1)
Total												$	18					$	(10)

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- Definition

Tabular disclosure of the effective portion of the gains and losses on derivative instruments designated (and non-derivative instruments) designated and qualifying in cash flow hedges and net investment hedges that was recognized in other comprehensive income (loss) during the current period.

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