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Financial Instruments | 9 Months Ended
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Sep. 30, 2017
Financial Instruments Disclosure [Abstract] |
Financial Instruments | Financial Instruments At September 30, 2017, the company had $1,826 million ($1,362 million at December 31, 2016) of held-to-maturity securities (primarily time deposits) classified as marketable securities as these securities had maturities of more than three months to less than 1 year at the time of purchase. The company’s investments in held-to-maturity securities are held at amortized cost, which approximates fair value. Available-for-sale securities are reported at estimated fair value with unrealized gains and losses reported as a component of accumulated other comprehensive loss. There were no sales of available-for-sale securities for the period September 1 through September 30, 2017 or for the period January 1 through August 31, 2017. The proceeds from the sale of available-for-sale securities for the three and nine months ended September 30, 2016 were $161 million and $626 million, respectively. Derivative Instruments Objectives and Strategies for Holding Derivative Instruments In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk. Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps. The company has not designated any nonderivatives as hedging instruments. The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties to limit its exposure to credit losses. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management. The notional amounts of the company's derivative instruments were as follows:
Notional Amounts | Successor | Predecessor
(In millions) | September 30, 2017 | December 31, 2016
Derivatives designated as hedging instruments: |  |
Commodity contracts | $ | — |  | $ | 422 |
Derivatives not designated as hedging instruments: |  |
Foreign currency contracts | 11,528 |  | 9,896 |
Commodity contracts | 8 |  | 7 |
The notional amounts of the company's commodity derivatives were as follows:
Commodity Gross Aggregate Notionals | Successor September 30, 2017 | Predecessor December 31, 2016 | Notional Volume Unit
Derivatives designated as hedging instruments: |  |  |
Corn | — |  | 55.2 |  | million bushels
Soybean | — |  | 22.1 |  | million bushels
Derivatives not designated as hedging instruments: |  |  |  |  |
Soybean | 0.5 |  | 0.2 |  | million bushels
Soybean Oil | 3.3 |  | 7.3 |  | million pounds
Soybean Meal | 4.8 |  | 9.1 |  | kilotons
Foreign Currency Risk The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments and cash flows. The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities of its operations. The primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, net of related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates. Commodity Price Risk Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn, soybeans, soybean oil and soybean meal. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with agricultural commodity exposures. Derivatives Designated as Cash Flow Hedges Foreign Currency Contracts The company uses foreign currency exchange instruments such as forwards and options to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. In addition, the company occasionally uses forward exchange contracts to offset a portion of the company’s exposure to certain foreign currency-denominated transactions such as capital expenditures. Commodity Contracts The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures and swaps, to hedge the commodity price risk associated with agriculture commodity exposures. While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring. The following table summarizes the after-tax effect of cash flow hedges on accumulated other comprehensive loss:
| Successor | Predecessor
(In millions) | For the Period September 1 - September 30, 2017 | For the Period July 1 - August 31, 2017 | Three Months Ended September 30, 2016 | For the Period Jan. 1 - August 31, 2017 | Nine Months Ended September 30, 2016
Beginning balance | $ | — |  | $ | (4 | ) | $ | 10 |  | $ | 7 |  | $ | (24 | )
Additions and revaluations of derivatives designated as cash flow hedges | — |  | 1 |  | (2 | ) | 3 |  | 21 |
Clearance of hedge results to earnings | — |  | — |  | — |  | (13 | ) | 11 |
Ending balance | $ | — |  | $ | (3 | ) | $ | 8 |  | $ | (3 | ) | $ | 8 |
Derivatives not Designated in Hedging Relationships Foreign Currency Contracts The company routinely uses forward exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on the contracts offset changes in the USD value of the related foreign currency-denominated revenues. Commodity Contracts The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn, soybeans, soybean oil and soybean meal. Fair Value of Derivative Instruments During the Predecessor period, the company's derivative assets and liabilities are reported on a gross basis in the interim Condensed Consolidated Balance Sheets. During the Successor period, to conform with DowDuPont's presentation post-merger, asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the interim Condensed Consolidated Balance Sheets. The presentation of the company's derivative assets and liabilities is as follows:
|  | Successor
|  | September 30, 2017
(In millions) | Balance Sheet Location | Gross | Counterparty and Cash Collateral Netting 1 | Net Amounts Included in the Condensed Consolidated Balance Sheet
Asset derivatives: |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | Other current assets | $ | 88 |  | $ | (75 | ) | $ | 13 |
Total asset derivatives |  | $ | 88 |  | $ | (75 | ) | $ | 13 |
Liability derivatives: |  |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign currency contracts | Accrued and other current liabilities | $ | 107 |  | $ | (75 | ) | $ | 32 |
Total liability derivatives |  | $ | 107 |  | $ | (75 | ) | $ | 32 |
1. | Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty. The company held cash collateral of $0 million as of September 30, 2017.
|  | Predecessor
(In millions) | Balance Sheet Location | December 31, 2016
Asset derivatives: |  |
Derivatives not designated as hedging instruments: |  |
Foreign currency contracts 1 | Accounts and notes receivable - net | $ | 182 |
Total asset derivatives 2 |  | $ | 182 |
Cash collateral 1 | Accrued and other current liabilities | $ | 52 |
Liability derivatives: |  |
Derivatives not designated as hedging instruments: |  |  |
Foreign currency contracts | Accrued and other current liabilities | $ | 121 |
Total liability derivatives 2 |  | $ | 121 |
1. | Cash collateral held as of December 31, 2016 is related to foreign currency derivatives not designated as hedging instruments.
2. | The company's derivative assets and liabilities subject to enforceable master netting arrangements totaled $114 million at December 31, 2016.
Effect of Derivative Instruments
| Amount of Gain (Loss) Recognized in OCI 1 (Effective Portion)
| Successor | Predecessor
(In millions) | For the Period September 1 - September 30, 2017 | For the Period July 1 - August 31, 2017 | Three Months Ended September 30, 2016 | For the Period Jan. 1 - August 31, 2017 | Nine Months Ended September 30, 2016
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Commodity contracts | $ | — |  | $ | 1 |  | $ | (3 | ) | $ | 5 |  | $ | 34 |
Total derivatives | $ | — |  | $ | 1 |  | $ | (3 | ) | $ | 5 |  | $ | 34 |
1. | OCI is defined as other comprehensive income (loss).
| Amount of Gain (Loss) Recognized in Income 1
| Successor | Predecessor
(In millions) | For the Period September 1 - September 30, 2017 | For the Period July 1 - August 31, 2017 | Three Months Ended September 30, 2016 | For the Period Jan. 1 - August 31, 2017 | Nine Months Ended September 30, 2016
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow hedges: |  |  |  |  |
Commodity contracts 2 | $ | — |  | $ | — |  | $ | — |  | $ | 21 |  | $ | (18 | )
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Foreign currency contracts 4 | 112 |  | (260 | ) | (82 | ) | (431 | ) | (397 | )
Foreign currency contracts 3 | — |  | — |  | — |  | — |  | (15 | )
Commodity contracts 2 | — |  | 2 |  | (1 | ) | 2 |  | (11 | )
Total derivatives | $ | 112 |  | $ | (258 | ) | $ | (83 | ) | $ | (408 | ) | $ | (441 | )
1. | For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from accumulated OCI into income during the period. There was no material ineffectiveness with regard to the company's cash flow hedges during the period.
2. | Recorded in cost of goods sold
3. | Recorded in net sales.
4. | Gain recognized in sundry income (expense) - net was partially offset by the related gain on the foreign currency-denominated monetary assets and liabilities of the company's operations, which were $65 million for the periods July 1 through August 31, 2017 and $6 million for the three months ended September 30, 2016, and $37 million for the period January 1 through August 31, 2017 and $185 million for the nine months ended September 30, 2016. See Note 6 for additional information.

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- Definition Financial Instruments Disclosure [Abstract] + References No definition available. + Details
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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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