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Hedges and Derivative Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments
The following table summarizes our foreign currency denominated debt and foreign exchange forwards/options designated as net investment hedges at June 30, 2019 and December 31, 2018:
 
 
Notional (Local)
 
Notional (USD)
 
Current Maturity
Instrument
 
2019
 
2018
 
2019
 
2018
 
Senior note - 0.625%
 
€
500

 
€
500

 
$
569

 
$
573

 
March 2020
Commercial Paper
 
€
296

 
€
—

 
$
337

 
$
—

 
July 2019
Foreign exchange forwards/options
 
MXN 7,200

 
MXN 7,200

 
$
375

 
$
366

 
August 2022

The following table summarizes our outstanding derivative contracts and their effects in our Consolidated Condensed Balance Sheets at June 30, 2019 and December 31, 2018:
 

 

Fair Value of

Type 
of
Hedge(1)

 


Notional Amount

Hedge Assets

Hedge Liabilities

Maximum Term (Months)
Millions of dollars

2019

2018

2019

2018

2019

2018


2019

2018
Derivatives accounted for as hedges


















Foreign exchange forwards/options

$
3,108


$
3,126


$
43


$
49


$
44


$
48


(CF/NI)

38

44
Commodity swaps/options

235


216


4


1


21


27


(CF)

24

30
Interest rate derivatives
 
700

 
—

 
14

 
—

 
36

 
—

 
(CF)
 
116
 
0
Total derivatives accounted for as hedges







$
61


$
50


$
101


$
75







Derivatives not accounted for as hedges


















Foreign exchange forwards/options

$
2,804


$
4,382


$
20


$
27


$
23


$
69


N/A

15

21
Commodity swaps/options

4


3


—


—


—


—


N/A

24

0
Total derivatives not accounted for as hedges







20


27


23


69







Total derivatives





$
81


$
77


$
124


$
144
































Current





$
40


$
60


$
52


$
95







Noncurrent







41


17


72


49







Total derivatives





$
81


$
77


$
124


$
144








(1) Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges
Schedule of Effects of Derivative Instruments on Consolidated Statements of Income
The following tables summarize the effects of derivative instruments and foreign currency debt designated as net investment hedges in our Consolidated Condensed Statements of Comprehensive Income for the periods presented:
 
 
 
 
Three Months Ended June 30,
 
 
 
Gain (Loss)
Recognized in OCI
(Effective Portion ) (2)
Cash Flow Hedges - Millions of dollars
 
 
2019
 
2018
Foreign exchange forwards/options
 
$
(4
)
 
$
76

Commodity swaps/options
 
(22
)
 
—

Interest rate derivatives
 
(5
)
 
—

 
 
 
 
 
Net Investment Hedges
 
 
 
 
Foreign currency
 
(20
)
 
69

 
 
$
(51
)
 
$
145

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
Cash Flow Hedges - Millions of dollars
 
 
2019
 
2018
Foreign exchange forwards/options
 
Net sales
 
$
(1
)
 
$
—

Foreign exchange forwards/options
 
Cost of products sold
 
6

 
(6
)
Foreign exchange forwards/options
 
Interest and sundry (income) expense
 
(4
)
 
50

Commodity swaps/options (3)
 
Cost of products sold
 
$
(6
)
 
$
10

Interest rate derivatives
 
Interest expense
 
$
3

 
$
(1
)
Interest rate derivatives
 
Interest and sundry (income) expense
 
(8
)
 
—

 
 
 
 
$
(10
)
 
$
53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
Location of Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 
Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
Derivatives not Accounted for as Hedges - Millions of dollars
 
 
2019
 
2018
Foreign exchange forwards/options
 
Interest and sundry (income) expense
 
$
(35
)
 
$
134

(2) The tax impact of the cash flow hedges was $5 million and $(5) million for the three months ended June 30, 2019 and 2018. The tax impact of the net investment hedges was $5 million and $(13) million for the three months ended June 30, 2019 and 2018, respectively.
(3) Cost for commodity swaps/options are recognized in cost of sales as products are sold.
 
 
 
 
 
 
Six Months Ended June 30,
 
 
 
 
 
 
Gain (Loss)
Recognized in OCI
(Effective Portion)(4)
Cash Flow Hedges - Millions of dollars
 
 
 
 
 
2019
 
2018
Foreign exchange
 
$
24

 
$
76

Commodity swaps/options
 
—

 
(15
)
Interest rate derivatives
 
(22
)
 

 
 
 
 
 
Net Investment Hedges
 
 
 
 
Foreign currency
 
(19
)
 
6

 
 
$
(17
)
 
$
67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
Cash Flow Hedges - Millions of dollars
 
 
2019
 
2018
Foreign exchange forwards/options
 
Net sales
 
$
(2
)
 
$
(2
)
Foreign exchange forwards/options
 
Cost of products sold
 
11

 
(12
)
Foreign exchange forwards/options
 
Interest and sundry (income) expense
 
33

 
56

Commodity swaps/options (3)
 
Cost of products sold
 
(9
)
 
23

Interest rate derivatives
 
Interest expense
 
4

 
(1
)
Interest rate derivatives
 
Interest and sundry (income) expense
 
—

 

 
 
 
 
$
37

 
$
64

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
Location of Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 
Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges (2)
Derivatives not Accounted for as Hedges - Millions of dollars
 
 
2019
 
2018
Foreign exchange forwards/options
 
Interest and sundry (income) expense
 
$
(6
)
 
$
63


(4) The tax impact of the cash flow hedges was $10 million and $0 million for the six months ended June 30, 2019 and 2018. The tax impact of the net investment hedges was $6 million and $(1) million for the six months ended June 30, 2019 and 2018, respectively.