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Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Investments, All Other Investments [Abstract]

Carrying Amount and Estimated Fair Values of Financial Instruments

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.

Derivative Instruments Notional Amount Outstanding

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

Derivative Instruments Measured at Fair Value

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 Sheet

Derivative Instruments Which Were Not Designated as Hedging Instruments

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.

Derivative Instruments Designated as Cash Flow and Net Investment Hedging Instruments

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.

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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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Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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-Publisher FASB
-Name Accounting Standards Codification
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Tabular disclosure of the notional amounts of outstanding derivative positions.

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Tabular disclosure of derivative instrument not designated or qualifying as hedging instrument.

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