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DERIVATIVE INSTRUMENTS
 12 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS DERIVATIVE INSTRUMENTS
The Company maintains various agreements with bank counterparties that permit the Company to enter into "over-the-counter" derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates of its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes.

Fair Value Hedges
The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swaps, along with the gain or loss on the hedged item, are recorded in earnings under the same line item, Interest expense, net. The notional amount of the Company’s outstanding fair value hedges as of December 31, 2021 and 2020 was $500 million.

Cash Flow Hedges
The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of AOCE and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of December 31, 2021 and 2020 was approximately $34 million.
The effect of the Company's fair value and cash flow hedges on the Consolidated Statement of Earnings for the twelve months ended December 31, 2021 and 2020 is as follows (in millions of dollars):
For the Years Ended December 31,
20212020
Total gains or (losses) recognized in earnings by line item in which the effects of fair value and cash flow hedges are recorded:
Interest expense – net
  Fair value hedge:
Interest rate contracts:
      Hedged item$20 $(21)
      Derivatives designated as hedging instrument$(20)$21 
Other – net
  Cash flow hedge:
Foreign exchange contracts:
      Hedged item$— $2 
      Amount of gains (losses) reclassified from
         AOCE into earnings:$— $(2)

The effect of the Company’s cash flow hedges on AOCE for the twelve months ended December 31, 2021 and 2020 was not material.

The fair value and carrying amounts of outstanding derivative instruments in the Consolidated Balance Sheets as of December 31, 2021 and 2020 was as follows (in millions of dollars):
As of December 31,
20212020
Balance Sheet ClassificationFair Value and Carrying Amounts
Cross-currency swapOther non-current liabilities$2 $2 
Interest rate swapsOther assets$1 $21 

The carrying amount of the liability hedged by the interest rate swaps (Long-term debt), including the cumulative amount of fair value hedging adjustments, as of December 31, 2021 and 2020 amounted to $501 million and $521 million, respectively.
The estimated fair values of the Company's derivative instruments were based on quoted market forward prices, which are classified as Level 2 inputs within the fair value hierarchy and reflect the present value of the amount that the Company would pay for contracts involving the same notional amounts and maturity dates. No adjustments were required during the current period to reflect the counterparty’s credit risk and/or the Company’s own nonperformance risk.