Derivative Financial Instruments

3 Months Ended

Mar. 31, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

11.	Derivative Financial Instruments

The Company uses derivative instruments to manage certain foreign currency exchange rate risks 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 hedges). In addition, the Company executes forward currency contracts to manage the foreign currency risk on recognized nonfunctional currency monetary accounts (non-designated hedges).

The Company had the following outstanding foreign currency forward contracts at March 31, 2021 (in millions):

	Currency Denomination
	March 31,		December 31,
Foreign Currency	2021		2020
South Korean Won	KRW	17,600	KRW	17,600
Norwegian Krone	NOK	3,131	NOK	3,817
Russian Ruble	RUB	1,159	RUB	1,118
Mexican Peso	MXN	421	MXN	402
Japanese Yen	JPY	390	JPY	340
U.S. Dollar	USD	308	USD	367
Euro	EUR	131	EUR	116
South African Rand	ZAR	124	ZAR	124
Singapore Dollar	SGD	31	SGD	31
British Pound Sterling	GBP	17	GBP	18
Danish Krone	DKK	5	DKK	875
Canadian Dollar	CAD	2	CAD	1
Brazilian Real	BRL	-	BRL	768

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 ($19) 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 foreign exchange driven value changes in the hedged nonfunctional monetary accounts.

The amount of gain (loss) recognized in other income (expense), net was ($4) million and ($43) million for the three months ended March 31, 2021 and 2020, 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	2021		2020		Location	2021		2020
Derivatives designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	4	$	17	Accrued liabilities	$	6	$	11
Foreign exchange contracts	Other Assets		—		12	Other liabilities		—		-

Total derivatives designated as hedging instruments under ASC Topic 815		$	4	$	29		$	6	$	11

Derivatives not designated as hedging instruments under ASC Topic 815

Foreign exchange contracts	Prepaid and other current assets	$	20	$	17	Accrued liabilities	$	2	$	4
Foreign exchange contracts	Other Assets		3		—	Other Liabilities		—		—

Total derivatives not designated as hedging instruments under ASC Topic 815		$	23	$	17		$	2	$	4

Total derivatives		$	27	$	46		$	8	$	15