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Financial Instruments | 9 Months Ended
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Sep. 30, 2023
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 also considers counterparty credit risk in its assessment of 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 Term SOFR 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 15 of the Company’s 2022 Form 10-K. The carrying values and the estimated fair values of financial instruments at September 30, 2023 and December 31, 2022 consisted of the following:
| September 30, 2023 |  | December 31, 2022
(DOLLARS IN MILLIONS) | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
LEVEL 1 |  |  |  |  |  |  |
Cash and cash equivalents(1) | $ | 629 |  |  | $ | 629 |  |  | $ | 483 |  |  | $ | 483 |
LEVEL 2 |  |  |  |  |  |  |
Credit facilities and bank overdrafts(2) | — |  |  | — |  |  | 106 |  |  | 106 |
Derivatives |  |  |  |  |  |  |
Derivative assets(3) | 3 |  |  | 3 |  |  | 1 |  |  | 1 |
Derivative liabilities(3) | 126 |  |  | 126 |  |  | 75 |  |  | 75 |
Commercial paper(2) | — |  |  | — |  |  | 187 |  |  | 187 |
Long-term debt: |  |  |  |  |  |  |
2023 Notes(4) | — |  |  | — |  |  | 300 |  |  | 298 |
2024 Euro Notes(4) | 525 |  |  | 518 |  |  | 532 |  |  | 519 |
2025 Notes(4) | 1,000 |  |  | 897 |  |  | 1,000 |  |  | 884 |
2026 Euro Notes(4) | 836 |  |  | 757 |  |  | 845 |  |  | 774 |
2027 Notes(4) | 1,213 |  |  | 995 |  |  | 1,215 |  |  | 1,006 |
2028 Notes(4) | 398 |  |  | 367 |  |  | 398 |  |  | 380 |
2030 Notes(4) | 1,509 |  |  | 1,130 |  |  | 1,510 |  |  | 1,188 |
2040 Notes(4) | 773 |  |  | 468 |  |  | 774 |  |  | 535 |
2047 Notes(4) | 495 |  |  | 336 |  |  | 495 |  |  | 390 |
2048 Notes(4) | 787 |  |  | 598 |  |  | 787 |  |  | 685 |
2050 Notes(4) | 1,570 |  |  | 874 |  |  | 1,571 |  |  | 1,021 |
2024 Term Loan Facility(5) | 570 |  |  | 570 |  |  | 625 |  |  | 625 |
2026 Term Loan Facility(5) | 625 |  |  | 625 |  |  | 625 |  |  | 625 |
_______________________ (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 Note is obtained from pricing services engaged by the Company, and the Company receives one price for each security. The fair value provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. The inputs to the valuation techniques applied by the pricing services are typically benchmark yields, benchmark security prices, credit spreads, reported trades and broker-dealer quotes, all with reasonable levels of transparency. (5)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 and foreign currency receivables and payables. 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. The Company also utilizes options, futures and swaps that are designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of natural gas used in our manufacturing process. Hedges Related to Issuances of Debt As of September 30, 2023, the Company designated approximately $1.361 billion of Euro Notes 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 other comprehensive income (“OCI”) as a component of foreign currency translation adjustments in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Loss. Cross Currency Swaps The Company has twelve EUR/USD cross currency swaps with a notional value of $1.400 billion that mature through November 2030. 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. As of September 30, 2023, the twelve swaps were in a liability position with an aggregate fair value of $89 million, which were classified as Other liabilities on the Consolidated Balance Sheets. 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, 2023 and December 31, 2022:
(DOLLARS IN MILLIONS) | September 30, 2023 |  | December 31, 2022
Foreign currency contracts(1) | $ | (1,248) |  |  | $ | 92 |
Commodity contracts(1) | 13 |  |  | (1) |
Cross currency swaps | 1,400 |  |  | 1,400 |
_______________________ (1)Foreign currency contracts and commodity contracts are presented net of contracts bought and sold. The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected on the Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:
| September 30, 2023
(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 | $ | — |  |  | $ | 3 |  |  | $ | 3 |
Derivative liabilities(2) |  |  |  |  |
Foreign currency contracts | $ | — |  |  | $ | 37 |  |  | $ | 37 |
Cross currency swaps | 89 |  |  | — |  |  | 89 |
Total derivative liabilities | $ | 89 |  |  | $ | 37 |  |  | $ | 126 |
| December 31, 2022
(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) |  |  |  |  |
Cross currency swaps | $ | 75 |  |  | $ | — |  |  | $ | 75 |
_______________________ (1)Derivative assets are recorded to Prepaid expenses and other current assets on the Consolidated Balance Sheets. (2)Derivative liabilities are recorded to Other current liabilities and Other liabilities on the Consolidated Balance Sheets. The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments on the Consolidated Statements of Income (Loss) and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022:
| Amount of Gain (Loss) |  | Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) | Three Months Ended September 30, |
2023 |  | 2022 |
Foreign currency contracts(1) | $ | (26) |  |  | $ | 2 |  |  | Other income, net
| Amount of Gain (Loss) |  | Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) | Nine Months Ended September 30, |
2023 |  | 2022 |
Foreign currency contracts(1) | $ | (23) |  |  | $ | 4 |  |  | Other income, net
Commodity contracts | 2 |  |  | — |  |  | Cost of goods sold
Total | $ | (21) |  |  | $ | 4 |  |  |
_______________________ (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 net investment hedging instruments, net of tax, on the Consolidated Statements of Income (Loss) and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022:
| Amount of Gain (Loss) Recognized in OCI on Derivative and Non-Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (“AOCI”) into Income (Effective Portion) |  | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
| Three Months Ended September 30, |  |  | Three Months Ended September 30,
(DOLLARS IN MILLIONS) | 2023 |  | 2022 |  |  | 2023 |  | 2022
Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
Cross currency swaps | $ | 22 |  |  | $ | (36) |  |  | N/A |  | $ | — |  |  | $ | — |
Non-Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
2024 Euro Notes | 15 |  |  | 30 |  |  | N/A |  | — |  |  | — |
2026 Euro Notes | 25 |  |  | 48 |  |  | N/A |  | — |  |  | — |
Total | $ | 62 |  |  | $ | 42 |  |  |  |  | $ | — |  |  | $ | — |
| Amount of Gain (Loss) Recognized in OCI on Derivative and Non-Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) |  | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
| Nine Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  |  | 2023 |  | 2022
Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
Cross currency swaps | $ | (11) |  |  | $ | 12 |  |  | N/A |  | $ | — |  |  | $ | — |
Non-Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |
2024 Euro Notes | 4 |  |  | 60 |  |  | N/A |  | — |  |  | — |
2026 Euro Notes | 7 |  |  | 96 |  |  | N/A |  | — |  |  | — |
Total | $ | — |  |  | $ | 168 |  |  |  |  | $ | — |  |  | $ | — |
The ineffective portion of the above noted net investment hedges was not material and was recorded as a component of interest expense on the Consolidated Statements of Income (Loss) and Comprehensive Loss during the three and nine months ended September 30, 2023 and 2022. At September 30, 2023, 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.

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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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