XML 30 R20.htm IDEA: XBRL DOCUMENT
v3.21.2

Financial Instruments | 9 Months Ended
--- | ---
Sep. 30, 2021
Investments, All Other Investments [Abstract] |
Financial Instruments | FINANCIAL INSTRUMENTS Fair Value Accounting guidance on fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: •Level 1 — Quoted prices for identical instruments in active markets. •Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. •Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company determines the fair value of structured liabilities (where performance is linked to structured interest rates, inflation or currency risks) using the London Interbank Offer Rate ("LIBOR") swap curve and forward interest and exchange rates at period end. Such instruments are classified as Level 2 based on the observability of significant inputs to the model. The Company does not have any instruments classified as Level 3, other than those included in pension asset trusts as discussed in Note 16 of the Company's 2020 Form 10-K. These valuations take into consideration the Company's credit risk and its counterparties’ credit risk. The estimated change in the fair value of these instruments due to such changes in its own credit risk (or instrument-specific credit risk) was not material as of September 30, 2021. The carrying values and the estimated fair values of financial instruments at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 |  | December 31, 2020
(DOLLARS IN MILLIONS) | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
LEVEL 1 |  |  |  |  |  |  |
Cash and cash equivalents(1) | $ | 672 |  |  | $ | 672 |  |  | $ | 650 |  |  | $ | 650 |
2025 Notes(6) | 1,001 |  |  | 993 |  |  | — |  |  | — |
2027 Notes(6) | 1,219 |  |  | 1,199 |  |  | — |  |  | — |
2030 Notes(6) | 1,511 |  |  | 1,490 |  |  | — |  |  | — |
2040 Notes(6) | 775 |  |  | 773 |  |  | — |  |  | — |
2050 Notes(6) | 1,573 |  |  | 1,583 |  |  | — |  |  | — |
LEVEL 2 |  |  |  |  |  |  |
Credit facilities and bank overdrafts(2) | 6 |  |  | 6 |  |  | 2 |  |  | 2 |
Derivatives |  |  |  |  |  |  |
Derivative assets(3) | 2 |  |  | 2 |  |  | 1 |  |  | 1 |
Derivative liabilities(3) | 10 |  |  | 10 |  |  | 29 |  |  | 29 |
Commercial paper (2) | 200 |  |  | 200 |  |  | — |  |  | — |
Long-term debt:(4) |  |  |  |  |  |  |
2021 Euro Notes | — |  |  | — |  |  | 368 |  |  | 370 |
2022 Notes | 300 |  |  | 301 |  |  | — |  |  | — |
2023 Notes | 300 |  |  | 311 |  |  | 299 |  |  | 316 |
2024 Euro Notes | 584 |  |  | 608 |  |  | 614 |  |  | 648 |
2026 Euro Notes | 930 |  |  | 1,002 |  |  | 978 |  |  | 1,061 |
2028 Notes | 397 |  |  | 463 |  |  | 397 |  |  | 472 |
2047 Notes | 494 |  |  | 592 |  |  | 494 |  |  | 608 |
2048 Notes | 786 |  |  | 1,038 |  |  | 786 |  |  | 1,059 |
2018 Term Loan Facility(2) | — |  |  | — |  |  | 240 |  |  | 240 |
2022 Term Loan Facility(2) | 200 |  |  | 200 |  |  | 199 |  |  | 200 |
2024 Term Loan Facility(7) | 625 |  |  | 625 |  |  | — |  |  | — |
2026 Term Loan Facility(7) | 625 |  |  | 625 |  |  | — |  |  | — |
Amortizing Notes(5) | — |  |  | — |  |  | 36 |  |  | 37 |
_______________________ (1)The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments. (2)The carrying amount approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments. (3)The carrying amount approximates fair value as the instruments are marked-to-market and held at fair value on the Consolidated Balance Sheets. (4)The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk. (5)The fair value of the Amortizing Notes of the TEUs was based on the most recently quoted price for the outstanding securities, adjusted for any known significant deviation in value. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange. (6)The fair value of the Notes is based on market quoted price as there is an active market for the Notes and observable market data and inputs. (7)The carrying amount approximates fair value as the Term Loans were assumed at fair value and the interest rate is reset frequently based on current market rates. Derivatives Foreign Currency Forward Contracts The Company periodically enters into foreign currency forward contracts with the objective of reducing exposure to cash flow volatility associated with its intercompany loans, foreign currency receivables and payables and anticipated purchases of certain raw materials used in operations. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions. Commodity Contracts The Company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as soybeans, soybean oil and soybean meal. Cash Flow Hedges The Company maintains several forward currency contracts which qualified as cash flow hedges. The objective of these hedges is to protect against the currency risk associated with forecasted U.S. dollar ("USD") denominated raw material purchases made by Euro ("EUR") functional currency entities which result from changes in the EUR/USD exchange rate. The effective portions of cash flow hedges are recorded in OCI as a component of Gains (losses) on derivatives qualifying as hedges in the accompanying Consolidated Statements of Income and Comprehensive (Loss) Income. Realized gains/(losses) in AOCI related to cash flow hedges of raw material purchases are recognized as a component of Cost of goods sold in the accompanying Consolidated Statements of Income and Comprehensive (Loss) Income in the same period as the related costs are recognized. Hedges Related to Issuances of Debt Subsequent to the issuance of the 2021 Euro Notes and 2026 Euro Notes during the third quarter of 2018, the Company designated the debt as a hedge of a portion of its net European investments. Accordingly, the change in the value of the debt that is attributable to foreign exchange movements is recorded in OCI as a component of foreign currency translation adjustments in the accompanying Consolidated Statements of Income and Comprehensive (Loss) Income. Subsequent to the issuance of the 2024 Euro Notes during the first quarter of 2016, the Company designated the debt as a hedge of a portion of its net European investments. Accordingly, the change in the value of the debt that is attributable to foreign exchange movements is recorded in OCI as a component of foreign currency translation adjustments in the accompanying Consolidated Statements of Income and Comprehensive (Loss) Income. Cross Currency Swaps During the third quarter of 2019, the Company entered into four EUR/USD cross currency swaps that mature through May 2023. The swaps all qualified as net investment hedges in order to mitigate a portion of the Company's net European investments from foreign currency risk. During the third quarter of 2020, the Company entered into a transaction to unwind two of the swaps issued in the third quarter of 2019 and paid proceeds of $15 million, net of accrued interest receivable of $2 million. The loss arising from the termination of the swaps has been included as a component of accumulated other comprehensive loss. As of September 30, 2021, the two remaining swaps were in a net liability position with an aggregate fair value of $9 million which was classified as other current liabilities. Changes in fair value related to cross currency swaps are recorded in OCI. The following table shows the notional amount of the Company’s derivative instruments outstanding as of September 30, 2021 and December 31, 2020:
(DOLLARS IN MILLIONS) | September 30, 2021 |  | December 31, 2020
Foreign currency contracts | $ | 53 |  |  | $ | 221 |
Commodity contracts | 23 |  |  | — |
Cross currency swaps | 300 |  |  | 300 |
The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected in the Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020:
| September 30, 2021
(DOLLARS IN MILLIONS) | Fair Value of Derivatives Designated as Hedging Instruments |  | Fair Value of Derivatives Not Designated as Hedging Instruments |  | Total Fair Value
Derivative assets(1) |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 2 |  |  | $ | 2 |
Derivative liabilities(2) |  |  |  |  |
Foreign currency contract | $ | — |  |  | $ | 1 |  |  | $ | 1 |
Cross currency swaps | 9 |  |  | — |  |  | 9 |
Total derivative liabilities | $ | 9 |  |  | $ | 1 |  |  | $ | 10 |
| December 31, 2020
(DOLLARS IN MILLIONS) | Fair Value of Derivatives Designated as Hedging Instruments |  | Fair Value of Derivatives Not Designated as Hedging Instruments |  | Total Fair Value
Derivative assets(1) |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 1 |  |  | $ | 1 |
Derivative liabilities(2) |  |  |  |  |
Foreign currency contracts | $ | 6 |  |  | $ | — |  |  | $ | 6 |
Cross currency swaps | 23 |  |  | — |  |  | 23 |
Total derivative liabilities | $ | 29 |  |  | $ | — |  |  | $ | 29 |
_______________________ (1)Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheets. (2)Derivative liabilities are recorded to Other current liabilities in the Consolidated Balance Sheets. The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments in the Consolidated Statements of Income and Comprehensive (Loss) Income for the three and nine months ended September 30, 2021 and 2020 (in millions):
| Amount of Gain (Loss) |  | Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) | Three Months Ended September 30, |
2021 |  | 2020 |
Foreign currency contracts(1) | $ | — |  |  | $ | 5 |  |  | Other (income) expense, net
| Amount of Gain (Loss) |  | Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) | Nine Months Ended September 30, |
2021 |  | 2020 |
Foreign currency contracts(1) | $ | 5 |  |  | $ | 1 |  |  | Other (income) expense, net
_______________________ (1)The foreign currency contract net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods. The following table shows the effect of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedging instruments, net of tax, in the Consolidated Statements of Income and Comprehensive (Loss) Income for the three and nine months ended September 30, 2021 and 2020 (in millions):
| Amount of Gain (Loss) Recognized in OCI on Derivative |  | Location of Gain (Loss) Reclassified from AOCI into Income |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
| Three Months Ended September 30, |  |  | Three Months Ended September 30,
(DOLLARS IN MILLIONS) | 2021 |  | 2020 |  |  | 2021 |  | 2020
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 1 |  |  | $ | (5) |  |  | Cost of goods sold |  | $ | (1) |  |  | $ | 2 |
Interest rate swaps (1) | — |  |  | 1 |  |  | Interest expense |  | — |  |  | (1) |
Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
Cross currency swaps | 5 |  |  | (8) |  |  | N/A |  | — |  |  | — |
Non-Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
2024 Euro Notes | 9 |  |  | (19) |  |  | N/A |  | — |  |  | — |
2021 Euro Notes & 2026 Euro Notes | 20 |  |  | (40) |  |  | N/A |  | — |  |  | — |
Total | $ | 35 |  |  | $ | (71) |  |  |  |  | $ | (1) |  |  | $ | 1 |
| Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
| Nine Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  |  | 2021 |  | 2020
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 7 |  |  | $ | (7) |  |  | Cost of goods sold |  | $ | (5) |  |  | $ | 5 |
Interest rate swaps (1) | — |  |  | 1 |  |  | Interest expense |  | — |  |  | (1) |
Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
Cross currency swaps | 11 |  |  | (2) |  |  | N/A |  | — |  |  | — |
Non-Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
2024 Euro Notes | 23 |  |  | (20) |  |  | N/A |  | — |  |  | — |
2021 Euro Notes & 2026 Euro Notes | 52 |  |  | (43) |  |  | N/A |  | — |  |  | — |
Total | $ | 93 |  |  | $ | (71) |  |  |  |  | $ | (5) |  |  | $ | 4 |
_______________________ (1)Interest rate swaps were entered into as pre-issuance hedges for bond offerings. The ineffective portion of the above noted cash flow hedges were not material during the three and nine months ended September 30, 2021 and 2020. At September 30, 2021, based on current market rates, the Company does not expect any derivative losses (net of tax), included in AOCI, to be reclassified into earnings within the next 12 months.

X
- 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
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsAllOtherInvestmentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration