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Fair Value Measurements and Financial Instruments | 9 Months Ended
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Sep. 30, 2018
Financial Instruments and Fair Value Measurements [Abstract] |
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments The Company uses available market information and other valuation methodologies in assessing the fair value of financial instruments. Judgment is required in interpreting market data to develop the estimates of fair value and, accordingly, changes in assumptions or the estimation methodologies may affect the fair value estimates. The Company is exposed to the risk of credit loss in the event of nonperformance by counterparties to financial instrument contracts; however, nonperformance is considered unlikely and any nonperformance is unlikely to be material, as it is the Company’s policy to contract only with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations. The Company is exposed to market risk from foreign currency exchange rates, interest rates and commodity price fluctuations. Volatility relating to these exposures is managed on a global basis by utilizing a number of techniques, including working capital management, sourcing strategies, selling price increases, selective borrowings in local currencies and entering into selective derivative instrument transactions, issued with standard features, in accordance with the Company’s treasury and risk management policies, which prohibit the use of derivatives for speculative purposes and leveraged derivatives for any purpose. It is the Company’s policy to enter into derivative instrument contracts with terms that match the underlying exposure being hedged. Hedge ineffectiveness, if any, is not material for any period presented. The Company’s derivative instruments include interest rate swap contracts, foreign currency contracts and commodity contracts. The Company utilizes interest rate swap contracts to manage its targeted mix of fixed and floating rate debt, and these swaps are valued using observable benchmark rates (Level 2 valuation). The Company utilizes foreign currency contracts, including forward and swap contracts, option contracts, local currency deposits and local currency borrowings to hedge portions of its foreign currency purchases, assets and liabilities arising in the normal course of business and the net investment in certain foreign subsidiaries. These contracts are valued using observable market rates (Level 2 valuation). Commodity futures contracts are utilized to hedge the purchases of raw materials used in production. These contracts are measured using quoted commodity exchange prices (Level 1 valuation). The duration of foreign currency and commodity contracts generally does not exceed 12 months. The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments which are carried at fair value in the Company’s Consolidated Balance Sheets at September 30, 2018 and December 31, 2017:
| Assets |  | Liabilities
| Account |  | Fair Value |  | Account |  | Fair Value
Designated derivative instruments |  |  | 9/30/18 |  | 12/31/17 |  |  |  | 9/30/18 |  | 12/31/17
Interest rate swap contracts | Other current assets |  | $ | — |  |  | $ | — |  |  | Other accruals |  | $ | 2 |  |  | $ | — |
Interest rate swap contracts | Other assets |  | — |  |  | — |  |  | Other liabilities |  | 16 |  |  | 7 |
Foreign currency contracts | Other current assets |  | 27 |  |  | 25 |  |  | Other accruals |  | 12 |  |  | 20 |
Foreign currency contracts | Other assets |  | — |  |  | — |  |  | Other liabilities |  | 28 |  |  | 46 |
Commodity contracts | Other current assets |  | — |  |  | — |  |  | Other accruals |  | 1 |  |  | — |
Total designated |  | $ | 27 |  |  | $ | 25 |  |  |  |  | $ | 59 |  |  | $ | 73 |
Other financial instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable securities | Other current assets |  | $ | 120 |  |  | $ | 14 |  |  |  |  |  |  |  |  |
Total other financial instruments |  |  | $ | 120 |  |  | $ | 14 |  |  |  |  |  |  |  |  |
The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of September 30, 2018 and December 31, 2017. The estimated fair value of the Company’s long-term debt, including the current portion, as of September 30, 2018 and December 31, 2017, was $6,660 and $6,799, respectively, and the related carrying value was $6,604 and $6,566, respectively. The estimated fair value of long-term debt was derived principally from quoted prices on the Company’s outstanding fixed-term notes (Level 2 valuation). Fair Value Hedges The Company has designated all interest rate swap contracts and certain foreign currency forward and option contracts as fair value hedges, for which the gain or loss on the derivative and the offsetting gain or loss on the hedged item are recognized in current earnings. The impact of foreign currency contracts is primarily recognized in Selling, general and administrative expenses and the impact of interest rate swap contracts is recognized in Interest (income) expense, net. Activity related to fair value hedges recorded during the three and nine months ended September 30, 2018 and 2017 was as follows:
| 2018 |  | 2017
| Foreign Currency Contracts |  | Interest Rate Swaps |  | Total |  | Foreign Currency Contracts |  | Interest Rate Swaps |  | Total
Notional Value at September 30, | $ | 400 |  |  | $ | 1,000 |  |  | $ | 1,400 |  |  | $ | 1,095 |  |  | $ | 600 |  |  | $ | 1,695 |
Three months ended September 30, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on derivatives | — |  |  | — |  |  | — |  |  | (14 | ) |  | (1 | ) |  | (15 | )
Gain (loss) on hedged items | — |  |  | — |  |  | — |  |  | 14 |  |  | 1 |  |  | 15 |
Nine months ended September 30, |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on derivatives | (7 | ) |  | (11 | ) |  | (18 | ) |  | (15 | ) |  | (3 | ) |  | (18 | )
Gain (loss) on hedged items | 7 |  |  | 11 |  |  | 18 |  |  | 15 |  |  | 3 |  |  | 18 |
Cash Flow Hedges All of the Company’s commodity contracts and certain foreign currency forward contracts have been designated as cash flow hedges, for which the effective portion of the gain or loss is reported as a component of Other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Activity related to cash flow hedges recorded during the three and nine months ended September 30, 2018 and 2017 was as follows:
| 2018 |  | 2017
| Foreign Currency Contracts |  | Commodity Contracts |  | Total |  | Foreign Currency Contracts |  | Commodity Contracts |  | Total
Notional Value at September 30, | $ | 821 |  |  | $ | 14 |  |  | $ | 835 |  |  | $ | 724 |  |  | $ | 1 |  |  | $ | 725 |
Three months ended September 30, |  |  |  |  |  |  |  |  |  |  |
Gain (loss) recognized in OCI | (2 | ) |  | — |  |  | (2 | ) |  | (8 | ) |  | — |  |  | (8 | )
Gain (loss) reclassified into Cost of sales | — |  |  | — |  |  | — |  |  | (4 | ) |  | — |  |  | (4 | )
Nine months ended September 30, |  |  |  |  |  |  |  |  |  |  |
Gain (loss) recognized in OCI | 4 |  |  | — |  |  | 4 |  |  | (28 | ) |  | — |  |  | (28 | )
Gain (loss) reclassified into Cost of sales | (8 | ) |  | — |  |  | (8 | ) |  | (2 | ) |  | — |  |  | (2 | )
The net gain (loss) recognized in OCI for both foreign currency contracts and commodity contracts is generally expected to be recognized in Cost of sales within the next twelve months. Net Investment Hedges The Company has designated certain foreign currency forward and option contracts and certain foreign currency-denominated debt as net investment hedges, for which the gain or loss on the instrument is reported as a component of Cumulative translation adjustments within OCI, along with the offsetting gain or loss on the hedged items. Activity related to net investment hedges recorded during the three and nine months ended September 30, 2018 and 2017 was as follows:
| 2018 |  | 2017
| Foreign Currency Contracts |  | Foreign Currency Debt |  | Total |  | Foreign Currency Contracts |  | Foreign Currency Debt |  | Total
Notional Value at September 30, | $ | 633 |  |  | $ | 1,417 |  |  | $ | 2,050 |  |  | $ | 749 |  |  | $ | 590 |  |  | $ | 1,339 |
Three months ended September 30, |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on instruments | 1 |  |  | 10 |  |  | 11 |  |  | (23 | ) |  | (22 | ) |  | (45 | )
Gain (loss) on hedged items | — |  |  | (10 | ) |  | (10 | ) |  | 22 |  |  | 22 |  |  | 44 |
Nine months ended September 30, |  |  |  |  |  |  |  |  |  |  |
Gain (loss) on instruments | 26 |  |  | 69 |  |  | 95 |  |  | (69 | ) |  | (115 | ) |  | (184 | )
Gain (loss) on hedged items | (23 | ) |  | (69 | ) |  | (92 | ) |  | 69 |  |  | 115 |  |  | 184 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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