Financial Instruments and Risk Management (Tables)

12 Months Ended

Dec. 31, 2015

Notional Amounts of Outstanding Derivative Instruments

As at December 31, 2015, the Company had the following outstanding derivative instruments that were entered into to hedge Euro-denominated and Singapore dollar-denominated forecasted transactions:


In millions of Euros	Notional amount for hedge on forecasted R&D and other operating expenses	Notional amount for hedge on forecasted manufacturing costs
Forward contracts	243	342

Currency collars	268	401

In millions of Singapore dollars	Notional amount for hedge on forecasted R&D and other operating expenses	Notional amount for hedge on forecasted manufacturing costs
Forward contracts	—	118

Fair Value of Derivative Instruments

Information on fair value of derivative instruments and their location in the consolidated balance sheets as at December 31, 2015 and December 31, 2014 is presented in the table below:

As at December 31, 2015

As at December 31, 2014

Asset Derivatives

Balance sheet location

Fair value

Balance sheet location

Fair value

Derivatives designated as a hedge:

Foreign exchange

forward contracts

Other current assets

—

Currency collars

Other non-current assets

—

Currency collars

Other current assets

—

Total derivatives designated as a hedge

—

Derivatives not designated as a hedge:

Foreign exchange

forward contracts

Other current assets

Total derivatives not designated as a hedge:

Total Derivatives


	As at December 31, 2015				As at December 31, 2014
Liability Derivatives	Balance sheet location	Fair value			Balance sheet location	Fair value
Derivatives designated as a hedge:
Foreign exchange forward contracts	Other payables and accrued liabilities		(18	)	Other payables and accrued liabilities		(43	)
Currency collars	Other payables and accrued liabilities		(6	)	Other payables and accrued liabilities		(28	)

Total derivatives designated as a hedge			(24	)			(71	)

Derivatives not designated as a hedge:
Foreign exchange forward contracts	Other payables and accrued liabilities		(1	)	Other payables and accrued liabilities		(2	)

Total derivatives not designated as a hedge:			(1	)			(2	)

Total Derivatives			(25	)			(73	)

Effect on Consolidated Statements of Income of Derivative Instruments

The effect on the consolidated statements of income for the year ended December 31, 2015 and December 31, 2014 and on the “Accumulated other comprehensive income (loss)” (“AOCI”) as reported in the statements of equity as at December 31, 2015 and December 31, 2014 of derivative instruments designated as cash flow hedge is presented in the table below:


	Gain (loss) deferred in OCI on derivative						Location of gain (loss) reclassified from OCI into earnings	Gain (loss) reclassified from OCI into earnings
	December 31, 2015			December 31, 2014				December 31, 2015			December 31, 2014
Foreign exchange forward contracts		(14	)		(30	)	Cost of sales		(63	)		2
Foreign exchange forward contracts		(1	)		(5	)	Selling, general and administrative		(8	)		0
Foreign exchange forward contracts		(4	)		(10	)	Research and development		(29	)		3
Currency options		—			—		Cost of sales		—			(1	)
Currency collars		(3	)		(20	)	Cost of sales		(42	)		(2	)
Currency collars		—			(4	)	Selling, general and administrative		(6	)		(1	)
Currency collars		(1	)		(7	)	Research and development		(22	)		(3	)

Total		(23	)		(76	)			(170	)		(2	)

Effect on Consolidated Statements of Income of Derivative Instruments Not Designated as Hedge

The effect on the consolidated statements of income for the year ended December 31, 2015 and December 31, 2014 of derivative instruments not designated as a hedge is presented in the table below:


	Location of gain recognized in earnings	Gain recognized in earnings
		December 31, 2015		December 31, 2014
Foreign exchange forward contracts	Other income and expenses, net		11		10
Total			11		10

Schedule of Financial Assets (Liabilities) Measured at Fair Value on Recurring Basis

The table below details financial assets (liabilities) measured at fair value on a recurring basis as at December 31, 2015:


				Fair Value Measurements using
	December 31, 2015			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Marketable securities – U.S. Treasury Bonds		335			335		—			—
Equity securities classified as available-for-sale		11			11		—			—
Equity securities classified as held-for-trading		8			8		—			—
Derivative instruments designated as cash flow hedge		(19	)		—		(19	)		—

Total		335			354		(19	)		—

The table below details financial assets (liabilities) measured at fair value on a recurring basis as at December 31, 2014:


				Fair Value Measurements using
	December 31, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Marketable securities – U.S. Treasury Bonds		334			334		—			—
Equity securities classified as available-for-sale		11			11		—			—
Equity securities classified as held-for-trading		8			8		—			—
Derivative instruments designated as cash flow hedge		(71	)		—		(71	)		—
Derivative instruments not designated as a hedge		(1	)		—		(1	)		—

Total		281			353		(72	)		—

Schedule of Assets (Liabilities) Measured at Fair Value on Non-Recurring Basis Using Significant Unobservable Inputs (Level 3)

For assets (liabilities) measured at fair value on a non-recurring basis using significant unobservable inputs (Level 3), the reconciliation between January 1, 2015 and December 31, 2015 is presented as follows:


	Fair Value Measurements using Significant Unobservable Inputs (Level 3)
January 1, 2015		—
Assets held for sale		1

December 31, 2015		1

Amount of total losses for the period included in earnings attributable to assets still held at the reporting date		—

Fair Value Information on Other Financial Assets and Liabilities Recorded at Amortized Cost

The following table includes additional fair value information on financial assets and liabilities as at December 31, 2015 and 2014:


	2015						2014
	Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Cash equivalents (1)		1		1,099		1,099		1,271		1,271
Long-term debt
- Bank loans (including current portion)		2		708		708		917		917
- Senior unsecured convertible bonds (2)		1		904		960		888		967

(1)	Cash equivalents primarily correspond to deposits at call with banks.

(2)

The carrying amount of the senior unsecured convertible bonds as reported above corresponds to the liability component only, since, at initial recognition, an amount of $121 million was recorded directly in shareholders’ equity as the value of the equity instrument embedded in the issued convertible bonds.