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Derivative Financial Instruments | 3 Months Ended
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Mar. 31, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments |
1 1. | 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 March 31, 2020 (in millions):
|  | Currency Denomination |
|  | March 31, |  |  | December 31, |
Foreign Currency |  | 2020 |  |  | 2019 |
South Korean Won |  | KRW |  | 17,600 |  |  | KRW |  | 17,600 |
Norwegian Krone |  | NOK |  | 5,232 |  |  | NOK |  | 5,377 |
Russian Ruble |  | RUB |  | 1,274 |  |  | RUB |  | 1,012 |
U.S. Dollar |  | USD |  | 536 |  |  | USD |  | 686 |
Mexican Peso |  | MXN |  | 458 |  |  | MXN |  | 115 |
Euro |  | EUR |  | 207 |  |  | EUR |  | 188 |
Japanese Yen |  | JPY |  | 191 |  |  | JPY |  | 36 |
South African Rand |  | ZAR |  | 124 |  |  | ZAR |  | 124 |
British Pound Sterling |  | GBP |  | 38 |  |  | GBP |  | 20 |
Danish Krone |  | DKK |  | 25 |  |  | DKK |  | 21 |
Singapore Dollar |  | SGD |  | 18 |  |  | SGD |  | 42 |
Canadian Dollar |  | CAD |  | 1 |  |  | CAD |  | 3 |
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 gain or loss on the derivative instrument is recorded in accumulated 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). The Company includes time value in hedge relationships. The Company expects $41 million of the accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve months. 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), together with the changes in the hedged nonfunctional monetary accounts. The amount of gain (loss) recognized in other income (expense), net was ($43) million and $4 million for the three months ended March 31, 2020 and 2019, respectively. 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 |  | 2020 |  |  | 2019 |  |  | Location |  | 2020 |  |  | 2019 |
Derivatives designated as hedging instruments under ASC Topic 815 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid and other current assets |  | $ | 7 |  |  | $ | 5 |  |  | Accrued liabilities |  | $ | 65 |  |  | $ | 18 |
Foreign exchange contracts |  | Other Assets |  |  | 3 |  |  |  | 4 |  |  | Other liabilities |  |  | 21 |  |  |  | 2 |
Total derivatives designated as hedging instruments under ASC Topic 815 |  |  |  | $ | 10 |  |  | $ | 9 |  |  |  |  | $ | 86 |  |  | $ | 20 |
Derivatives not designated as hedging instruments under ASC Topic 815 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid and other current assets |  | $ | 15 |  |  | $ | 8 |  |  | Accrued liabilities |  | $ | 32 |  |  | $ | 6 |
Foreign exchange contracts |  | Other Assets |  |  | 2 |  |  |  | 1 |  |  | Other Liabilities |  |  | — |  |  |  | — |
Total derivatives not designated as hedging instruments under ASC Topic 815 |  |  |  | $ | 17 |  |  | $ | 9 |  |  |  |  | $ | 32 |  |  | $ | 6 |
Total derivatives |  |  |  | $ | 27 |  |  | $ | 18 |  |  |  |  | $ | 118 |  |  | $ | 26 |

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- References No definition available. + Details
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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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