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Hedges and Derivative Financial Instruments (Tables) | 9 Months Ended
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Sep. 30, 2020
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 September 30, 2020 and December 31, 2019:
|  | Notional (Local) |  |  |  | Notional (USD) |  |  |  | Current Maturity
Instrument |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  |
Senior note - 0.625% |  | € | — |  |  | € | 500 |  |  | $ | — |  |  | $ | 569 |  |  | March 2020
Foreign exchange forwards/options |  | MXN | 7,200 |  |  | MXN | 7,200 |  |  | $ | 325 |  |  | $ | 382 |  |  | August 2022
The following table summarizes our outstanding derivative contracts and their effects in our Consolidated Condensed Balance Sheets at September 30, 2020 and December 31, 2019:
|  |  |  |  |  | Fair Value of |  |  |  |  |  |  |  |  |  |  |  |
|  | Notional Amount |  |  |  | Hedge Assets |  |  |  | Hedge Liabilities |  |  |  |  |  | Maximum Term (Months) |  |
Millions of dollars |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019
Derivatives accounted for as hedges(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity swaps/options |  | $ | 223 |  |  | $ | 174 |  |  | $ | 19 |  |  | $ | 4 |  |  | $ | 14 |  |  | $ | 10 |  |  | (CF) |  | 33 |  | 21
Foreign exchange forwards/options |  | 2,901 |  |  | 3,177 |  |  | 72 |  |  | 94 |  |  | 29 |  |  | 84 |  |  | (CF/NI) |  | 137 |  | 32
Cross-currency swaps |  | 1,275 |  |  | 1,275 |  |  | 26 |  |  | 25 |  |  | 16 |  |  | 23 |  |  | (CF) |  | 101 |  | 110
Interest rate derivatives |  | 300 |  |  | 300 |  |  | — |  |  | 6 |  |  | 46 |  |  | — |  |  | (CF) |  | 56 |  | 65
Total derivatives accounted for as hedges |  |  |  |  |  | $ | 117 |  |  | $ | 129 |  |  | $ | 105 |  |  | $ | 117 |  |  |  |  |  |  |
Derivatives not accounted for as hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity swaps/options |  | 1 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | N/A |  | 0 |  | 7
Foreign exchange forwards/options(2) |  | $ | 3,602 |  |  | $ | 3,182 |  |  | $ | 28 |  |  | $ | 15 |  |  | $ | 55 |  |  | $ | 22 |  |  | N/A |  | 12 |  | 12
Total derivatives not accounted for as hedges |  |  |  |  |  | 28 |  |  | 15 |  |  | 55 |  |  | 22 |  |  |  |  |  |  |
Total derivatives |  |  |  |  |  | $ | 145 |  |  | $ | 144 |  |  | $ | 160 |  |  | $ | 139 |  |  |  |  |  |  |
Current |  |  |  |  |  | $ | 105 |  |  | $ | 55 |  |  | $ | 80 |  |  | $ | 61 |  |  |  |  |  |  |
Noncurrent |  |  |  |  |  | 40 |  |  | 89 |  |  | 80 |  |  | 78 |  |  |  |  |  |  |
Total derivatives |  |  |  |  |  | $ | 145 |  |  | $ | 144 |  |  | $ | 160 |  |  | $ | 139 |  |  |  |  |  |  |
(1)Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges. (2)Foreign exchange forwards/options have increased due to hedging of a future intercompany loan.
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 September 30, |  |
|  |  |  |  |  | Gain (Loss) Recognized in OCI (Effective Portion ) (3) |  |
Cash Flow Hedges - Millions of dollars |  |  |  |  |  | 2020 |  | 2019
Commodity swaps/options |  |  |  |  |  | $ | 23 |  |  | $ | (5) |
Foreign exchange forwards/options |  |  |  |  |  | (37) |  |  | 79 |
Cross-currency swaps |  |  |  |  |  | (62) |  |  | — |
Interest rate derivatives |  |  |  |  |  | 13 |  |  | 54 |
Net investment hedges - foreign currency |  |  |  |  |  | (14) |  |  | 55 |
|  |  |  |  |  | (77) |  |  | 183 |
|  |  |  |  |  | Three Months Ended September 30, |  |
|  | Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) |  |  |  | Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)(4) |  |
Cash Flow Hedges - Millions of dollars |  |  |  |  |  | 2020 |  | 2019
Commodity swaps/options |  | Cost of products sold |  |  |  | $ | (4) |  |  | $ | (7) |
Foreign exchange forwards/options |  | Net sales |  |  |  | 2 |  |  | (1) |
Foreign exchange forwards/options |  | Cost of products sold |  |  |  | 11 |  |  | 5 |
Foreign exchange forwards/options |  | Interest and sundry (income) expense |  |  |  | (21) |  |  | 49 |
Cross-currency swaps |  | Interest and sundry (income) expense |  |  |  | (51) |  |  | 47 |
Interest rate derivatives |  | Interest expense |  |  |  | — |  |  | 3 |
|  |  |  |  |  | (63) |  |  | 96 |
|  |  |  |  |  | Three Months Ended September 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 |  |  |  |  |  | 2020 |  | 2019
Foreign exchange forwards/options |  | Interest and sundry (income) expense |  |  |  | $ | (18) |  |  | $ | 53 |
(3)Change in gain (loss) recognized in OCI (effective portion) for the three months ended September 30, 2020 is primarily driven by currency fluctuations and declines in commodity prices and interest rates compared to the prior year. The tax impact of the cash flow hedges was $2 million and $(8) million for the three months ended September 30, 2020 and 2019, respectively. The tax impact of the net investment hedges was $5 million and $(15) million for the three months ended September 30, 2020 and 2019, respectively. (4)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the three months ended September 30, 2020 was primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year.
|  |  |  |  |  | Nine Months Ended September 30, |  |
|  |  |  |  |  | Gain (Loss) Recognized in OCI (Effective Portion)(5) |  |
Cash Flow Hedges - Millions of dollars |  |  |  |  |  | 2020 |  | 2019
Commodity swaps/options |  |  |  |  |  | $ | (8) |  |  | $ | (5) |
Foreign exchange |  |  |  |  |  | 58 |  |  | 103 |
Cross-currency swaps |  |  |  |  |  | 33 |  |  | — |
Interest rate derivatives |  |  |  |  |  | (53) |  |  | 32 |
Net investment hedges - foreign currency |  |  |  |  |  | 39 |  |  | 36 |
|  |  |  |  |  | $ | 69 |  |  | $ | 166 |
|  |  |  |  |  | Nine Months Ended September 30, |  |
|  | Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) |  |  |  | Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)(6) |  |
Cash Flow Hedges - Millions of dollars |  |  |  |  |  | 2020 |  | 2019
Commodity swaps/options |  | Cost of products sold |  |  |  | $ | (21) |  |  | $ | (16) |
Foreign exchange forwards/options |  | Net sales |  |  |  | 5 |  |  | (3) |
Foreign exchange forwards/options |  | Cost of products sold |  |  |  | 20 |  |  | 16 |
Foreign exchange forwards/options |  | Interest and sundry (income) expense |  |  |  | (52) |  |  | 82 |
Cross-currency swaps |  | Interest and sundry (income) expense |  |  |  | (40) |  |  | 47 |
Interest rate derivatives |  | Interest expense |  |  |  | — |  |  | 7 |
|  |  |  |  |  | $ | (88) |  |  | $ | 133 |
|  |  |  |  |  | Nine Months Ended September 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 |  |  |  |  |  | 2020 |  | 2019
Foreign exchange forwards/options |  | Interest and sundry (income) expense |  |  |  | $ | (1) |  |  | $ | 47 |
(5)Change in gain (loss) recognized in OCI (effective portion) for the nine months ended September 30, 2020 is primarily driven by currency fluctuations and declines in commodity prices and interest rates compared to the prior year. The tax impact of the cash flow hedges was $(25) million and $2 million for the nine months ended September 30, 2020 and 2019, respectively. The tax impact of the net investment hedges was $(12) million and $(9) million for the nine months ended September 30, 2020 and 2019, respectively. (6)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the nine months ended September 30, 2020 was primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year.

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- Definition Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624181-113959 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5618551-113959 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624171-113959 + Details
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- Definition Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624163-113959 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5580258-113959 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41620-113959 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5579245-113959 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41638-113959 Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41678-113959 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41641-113959 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624171-113959 Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5579240-113959 + Details
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