Derivative Financial Instruments

3 Months Ended

Mar. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

11.	Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is the foreign currency exchange rate risk associated with sourcing goods and services in a currency different than the currency of sale. Forward currency contracts are executed to manage the foreign exchange risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). In addition, the Company executes forward currency contracts to manage the foreign currency risk on recognized nonfunctional currency monetary accounts (non-designated hedge).

The Company had the following outstanding foreign currency forward contracts at year end (in millions):

	Currency Denomination
	March 31,		December 31,
Foreign Currency	2019		2018
South Korean Won		KRW 17,600		KRW -
Norwegian Krone		NOK 4,725		NOK 5,229
U.S. Dollar		USD 699		USD 631
Mexican Peso		MXN 193		MXN 204
Euro		EUR 192		EUR 172
South African Rand		ZAR 124		ZAR 124
Japanese Yen		JPY 121		JPY 121
Danish Krone		DKK 103		DKK 35
Singapore Dollar		SGD 38		SGD -
British Pound Sterling		GBP 22		GBP 12
Canadian Dollar		CAD 2		CAD —

Cash Flow Hedging Strategy

To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company has instituted a cash flow hedging program. For derivative instruments that are designated and qualify as a cash flow hedge the effective portion of the gain or loss on the derivative instrument is reported as a component of Other Comprehensive Income (Loss) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues” when the hedged transactions are cash flows associated with forecasted revenues). Any ineffectiveness in the hedge relationship and components excluded from the assessment of effectiveness are recognized in the Consolidated Statements of Income (Loss) during the current period. Upon the adoption of ASU 2017-12, the Company elected to include time value in hedge relationships.

Non-designated Hedging Strategy

The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The gain or loss on the derivative instrument is recognized in other income (expense), net in the Consolidated Statement of Income (Loss), together with the changes in the hedged nonfunctional monetary accounts.

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
	Balance Sheet	March 31,		December 31,		Balance Sheet	March 31,		December 31,
	Location	2019		2018		Location	2019		2018
Derivatives designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	2	$	2	Accrued liabilities	$	16	$	17
Foreign exchange contracts	Other Assets		—		—	Other liabilities		7		11

Total derivatives designated as hedging instruments under ASC Topic 815		$	2	$	2		$	23	$	28

Derivatives not designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	2	$	4	Accrued liabilities	$	8	$	6
Foreign exchange contracts	Other Assets		—		—	Other Liabilities		—		2

Total derivatives not designated as hedging instruments under ASC Topic 815		$	2	$	4		$	8	$	8

Total derivatives		$	4	$	6		$	31	$	36

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

Derivatives in					Location of Gain (Loss)				Amount of Gain (Loss)
ASC Topic 815	Amount of Gain (Loss)				Reclassified from				Reclassified from					Location of Gain (Loss)	Amount of Gain (Loss)
Cash Flow Hedging	Recognized in				Accumulated				Accumulated OCI					Recognized in Income on	Recognized in Income on
Relationships	OCI on Derivative				OCI into Income				into Income					Derivative	Derivative
	Three Months Ended								Three Months Ended						Three Months Ended
	March 31,								March 31,						March 31,
	2019		2018						2019			2018			2019			2018
					Revenue					—			1	Cost of revenue		—			—
Foreign exchange contracts		3		22	Cost of revenue					(1	)		4	Other income(expense), net		(3	)		(1	)
Total		3		22						(1	)		5			(3	)		(1	)

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
					Three Months Ended
					March 31,
					2019		2018
Foreign exchange contracts	Other income (expense), net					4		11
Total						4		11