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Hedges and Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

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, 2021 and December 31, 2020:

						Notional (Local)												Notional (USD)												Current Maturity
Instrument						2021						2020						2021						2020
Foreign exchange forwards/options						MXN	7,200					MXN	7,200					$	350					$	362					August 2022

The following table summarizes our outstanding derivative contracts and their effects in our Consolidated Condensed Balance Sheets at September 30, 2021 and December 31, 2020:

																		Fair Value of
						Notional Amount												Hedge Assets												Hedge Liabilities																		Maximum Term (Months)
Millions of dollars						2021						2020						2021						2020						2021						2020												2021						2020
Derivatives accounted for as hedges(1)
Commodity swaps/options						$	268					$	215					$	48					$	39					$	3					$	4					(CF)						21						30
Foreign exchange forwards/options						2,871						3,028						107						58						62						110						(CF/NI)						125						134
Cross-currency swaps						1,275						1,275						25						23						27						86						(CF)						89						98
Interest rate derivatives						300						300						—						—						7						28						(CF)						44						53
Total derivatives accounted for as hedges																		$	180					$	120					$	99					$	228
Derivatives not accounted for as hedges
Commodity swaps/options						$	1					$	1					$	—					$	—					$	—					$	—					N/A						0						0
Foreign exchange forwards/options						2,970						4,161						33						25						17						96						N/A						11						12
Total derivatives not accounted for as hedges																		33						25						17						96
Total derivatives																		$	213					$	145					$	116					$	324
Current																		$	205					$	103					$	80					$	152
Noncurrent																		8						42						36						172
Total derivatives																		$	213					$	145					$	116					$	324

(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 on our Consolidated Condensed Statements of Comprehensive Income for the periods presented:

																		Three Months Ended September 30,
																		Gain (Loss) Recognized in OCI (Effective Portion ) (2)
Millions of dollars																		2021						2020
Cash flow hedges
Commodity swaps/options																		$	9					$	23
Foreign exchange forwards/options																		62						(37)
Cross-currency swaps																		40						(62)
Interest rate derivatives																		1						13
Net Investment hedges
Foreign currency																		7						(14)
																		119						(77)
																		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)(3)
Cash Flow Hedges - Millions of dollars																		2021						2020
Commodity swaps/options						Cost of products sold												$	21					$	(4)
Foreign exchange forwards/options						Net sales												(2)						2
Foreign exchange forwards/options						Cost of products sold												(9)						11
Foreign exchange forwards/options						Interest and sundry (income) expense												14						(21)
Cross-currency swaps						Interest and sundry (income) expense												37						(51)
																		61						(63)
																		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																		2021						2020
Foreign exchange forwards/options						Interest and sundry (income) expense												$	38					$	(18)

(2)Change in gain (loss) recognized in OCI (effective portion) for the three months ended September 30, 2021 is primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year. The tax impact of the cash flow hedges was $(14) million and $2 million for the three months ended September 30, 2021 and 2020, respectively. The tax impact of the net investment hedges was $(2) million and $5 million for the three months ended September 30, 2021 and 2020, respectively.

(3)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the three months ended September 30, 2021 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)(4)
Millions of dollars																		2021						2020
Cash flow hedges
Commodity swaps/options																		$	63					$	(8)
Foreign exchange																		69						58
Cross-currency swaps																		84						33
Interest rate derivatives																		21						(53)
Net investment hedges
Foreign currency																		4						39
																		$	241					$	69
																		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)(5)
Cash Flow Hedges - Millions of dollars																		2021						2020
Commodity swaps/options						Cost of products sold												$	50					$	(21)
Foreign exchange forwards/options						Net sales												—						5
Foreign exchange forwards/options						Cost of products sold												(3)						20
Foreign exchange forwards/options						Interest and sundry (income) expense												43						(52)
Cross-currency swaps						Interest and sundry (income) expense												88						(40)
																		$	178					$	(88)
																		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																		2021						2020
Foreign exchange forwards/options						Interest and sundry (income) expense												$	70					$	(1)

(4)Change in gain (loss) recognized in OCI (effective portion) for the nine months ended September 30, 2021 is primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year. The tax impact of the cash flow hedges was $(20) million and $(25) million for the nine months ended September 30, 2021 and 2020, respectively. The tax impact of the net investment hedges was $(1) million and $(12) million for the nine months ended September 30, 2021 and 2020, respectively.

(5)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the nine months ended September 30, 2021 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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