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Derivative Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Outstanding Foreign Currency Forward Contracts

The Company had the following outstanding foreign currency forward contracts to hedge non-functional currency cash flows from forecasted revenues and expenses (in millions):

 

 

 

Currency Denomination

 

 

 

September 30,

 

 

December 31,

 

Foreign Currency

 

2018

 

 

2017

 

Norwegian Krone

 

 

NOK          3,875

 

 

 

NOK          4,013

 

Japanese Yen

 

 

JPY              326

 

 

 

JPY              982

 

U.S. Dollar

 

 

USD             111

 

 

 

USD             163

 

Euro

 

 

EUR               82

 

 

 

EUR             120

 

Danish Krone

 

 

DKK              19

 

 

 

DKK              30

 

British Pound Sterling

 

 

GBP                 9

 

 

 

GBP               11

 

Canadian Dollar

 

 

CAD                 1

 

 

 

CAD               —

 

The Company had the following outstanding foreign currency forward contracts that hedge the fair value of non-functional currency monetary accounts (in millions):

 

 

 

Currency Denomination

 

 

 

September 30,

 

 

December 31,

 

Foreign Currency

 

2018

 

 

2017

 

Norwegian Krone

 

 

NOK          1,708

 

 

 

NOK          1,734

 

Russian Ruble

 

 

RUB          1,329

 

 

 

RUB          2,699

 

U.S. Dollar

 

 

USD             539

 

 

 

USD             463

 

Mexican Peso

 

 

MXN            285

 

 

 

MXN              —

 

South African Rand

 

 

ZAR             176

 

 

 

ZAR             150

 

Euro

 

 

EUR             122

 

 

 

EUR               99

 

Danish Krone

 

 

DKK              15

 

 

 

DKK              15

 

British Pound Sterling

 

 

GBP                 8

 

 

 

GBP                 3

 

Canadian Dollar

 

 

CAD                 1

 

 

 

CAD               —

 

 
Derivative Instruments and their Balance Sheet Classifications

The Company has the following gross fair values of its derivative instruments and their balance sheet classifications:

 

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

 

 

 

Fair Value

 

 

 

 

Fair Value

 

 

 

Balance Sheet

 

September 30,

 

 

December 31,

 

 

Balance Sheet

 

September 30,

 

 

December 31,

 

 

 

Location

 

2018

 

 

2017

 

 

Location

 

2018

 

 

2017

 

Derivatives designated as

   hedging instruments

   under ASC Topic 815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Prepaid and other current

assets

 

$

8

 

 

$

13

 

 

Accrued liabilities

 

$

5

 

 

$

3

 

Foreign exchange contracts

 

Other Assets

 

 

3

 

 

 

8

 

 

Other liabilities

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives designated

   as hedging instruments

   under ASC Topic 815

 

 

 

$

11

 

 

$

21

 

 

 

 

$

7

 

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated

   as hedging instruments

   under ASC Topic 815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Prepaid and other current

assets

 

$

4

 

 

$

10

 

 

Accrued liabilities

 

$

8

 

 

$

5

 

Foreign exchange contracts

 

Other Assets

 

 

3

 

 

 

2

 

 

Other Liabilities

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives not

   designated as hedging

   instruments under ASC

   Topic 815

 

 

 

$

7

 

 

$

12

 

 

 

 

$

9

 

 

$

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives

 

 

 

$

18

 

 

$

33

 

 

 

 

$

16

 

 

$

11

 

 
Effect of Derivative Instruments on Consolidated Statements of Income

The Effect of Derivative Instruments on the Consolidated Statements of Income ($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Location of Gain (Loss)

 

Amount of Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

Location of Gain (Loss)

 

Amount of Gain (Loss)

 

 

Recognized in Income on

 

Recognized in Income on

 

Derivatives in

 

Amount of Gain (Loss)

 

 

Reclassified from

 

Reclassified from

 

 

Derivative (Ineffective

 

Derivative (Ineffective

 

ASC Topic 815

 

Recognized in

 

 

Accumulated

 

Accumulated OCI

 

 

Portion and Amount

 

Portion and Amount

 

Cash Flow Hedging

 

OCI on Derivative

 

 

OCI into Income

 

into Income

 

 

Excluded from

 

Excluded from

 

Relationships

 

(Effective Portion) (a)

 

 

(Effective Portion)

 

(Effective Portion)

 

 

Effectiveness Testing)

 

Effectiveness Testing) (b)

 

 

 

Nine Months Ended

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

2018

 

 

2017

 

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

—

 

 

 

6

 

 

Cost of revenue

 

 

1

 

 

 

10

 

Foreign exchange

   contracts

 

 

4

 

 

 

67

 

 

Cost of revenue

 

 

2

 

 

 

(18

)

 

Other income(expense), net

 

 

(5

)

 

 

4

 

Total

 

 

4

 

 

 

67

 

 

 

 

 

 

 

2

 

 

 

(12

)

 

 

 

 

(4

)

 

 

14

 

 

Derivatives Not Designated as

 

Location of Gain (Loss)

 

Amount of Gain (Loss)

 

Hedging Instruments under

 

Recognized in Income

 

Recognized in Income on

 

ASC Topic 815

 

on Derivative

 

Derivative

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2018

 

 

2017

 

Foreign exchange contracts

 

Other income (expense), net

 

 

(11

)

 

 

65

 

Total

 

 

 

 

 

 

(11

)

 

 

65

 

 

(a) The Company expects that $8 million of the accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve months with an offset by losses from the underlying transactions resulting in no impact to earnings or cash flow.

(b) The amount of gain (loss) recognized in income includes $1 million and $10 million related to the ineffective portion of the hedging relationships for the nine months ended September 30, 2018 and 2017, respectively, and $(5) million and $4 million related to the amount excluded from the assessment of the hedge effectiveness for the nine months ended September 30, 2018 and 2017, respectively.