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Hedges and Derivative Financial Instruments (Tables)

9 Months Ended

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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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.

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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.

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