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DERIVATIVE INSTRUMENTS | 3 Months Ended
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Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTSThe 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 on 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, is recorded in earnings under the same line item, Interest expense – net. The notional amount of the Company’s outstanding fair value hedges as of March 31, 2022 and December 31, 2021 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 Accumulated other comprehensive earnings (losses) (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 March 31, 2022 and December 31, 2021 was approximately $34 million. The effect of the Company’s cash flow hedges on the Condensed Consolidated Statement of Earnings (Other – net) and AOCE for the three months ended March 31, 2022 and 2021 was not material. The effect of the Company's fair value hedges in Interest expense – net on the Condensed Consolidated Statement of Earnings for the three months ended March 31, 2022 and 2021 is as follows (in millions of dollars):
|  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2022 |  | 2021 |  |
|  |  |  |  | Gains (losses) |  |
Interest rate swaps: |  |  |  |  |  |  |  |  |
Hedged item |  |  |  |  | $ | 19 |  |  | $ | 10 |  |  |
Derivatives designated as hedging instrument |  |  |  |  | $ | (19) |  |  | $ | (10) |  |  |
The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 were as follows (in millions of dollars):
|  |  | As of
|  |  | March 31, 2022 |  | December 31, 2021
| Balance Sheet Classification |  | Fair Value and Carrying Amounts
Cross-currency swap | Accrued expenses |  | $ | 3 |  |  | $ | — |
| Other non-current liabilities |  | $ | — |  |  | $ | 2 |
Interest rate swaps | Other assets |  | $ | — |  |  | $ | 1 |
| Other non-current liabilities |  | $ | 18 |  |  | $ | — |
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 March 31, 2022 and December 31, 2021 amounted to $482 million and $501 million, respectively. The estimated fair values of the Company's derivative instruments were based on quoted market forward rates, 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 da tes. No adjustments were required during the current period to reflect the counterparty’s credit risk or the Company’s own nonperformance risk.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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