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FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
Gross Impact of Changes in Fair Value of Derivatives Designated as Cash Flow Hedges on AOCI and Net Income | The following table summarizes the gross impact of changes in the fair value of derivatives designated as cash flow hedges recognized in accumulated other comprehensive income (loss) and net income (loss) during the three and six months ended June 30, 2023 and 2022 (in millions):
|  |  |  | Recognized in Net Income
For the Three Months Ended June 30, |  | Gain (Loss) Recognized in Accumulated Other Comprehensive Income |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
2023 |  |  |  |  |  |
Foreign exchange contracts |  | $ | (26) |  |  |  |  |
|  |  |  | Net sales |  | (3) |
|  |  |  | Cost of goods sold |  | (5) |
|  |  |  | Other, net |  | 18 |
Interest rate contracts |  | (13) |  |  | Interest expense |  | 3 |
Total |  | $ | (39) |  |  |  |  | $ | 13 |
2022 |  |  |  |  |  |
Foreign exchange contracts |  | $ | (21) |  |  |  |  |
|  |  |  | Net sales |  | 1 |
|  |  |  | Cost of goods sold |  | (41) |
|  |  |  | Other, net |  | 6 |
Interest rate contracts |  | 13 |  |  | Interest expense |  | 9 |
Total |  | $ | (8) |  |  |  |  | $ | (25) |
|  |  |  | Recognized in Net Income
For the Six Months Ended June 30, |  | Gain (Loss) Recognized in Accumulated Other Comprehensive Income |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
2023 |  |  |  |  |  |
Foreign exchange contracts |  | $ | (11) |  |  |  |  |
|  |  |  | Net sales |  | (4) |
|  |  |  | Cost of goods sold |  | (32) |
|  |  |  | Other, net |  | 25 |
Interest rate contracts |  | (34) |  |  | Interest expense |  | 8 |
Total |  | $ | (45) |  |  |  |  | $ | (3) |
2022 |  |  |  |  |  |
Foreign exchange contracts |  | $ | (172) |  |  |  |  |
|  |  |  | Net sales |  | 2 |
|  |  |  | Cost of goods sold |  | (58) |
|  |  |  | Other, net |  | (4) |
Interest rate contracts |  | 50 |  |  | Interest expense |  | 17 |
Total |  | $ | (122) |  |  |  |  | $ | (43) |
Significant amounts reclassified out of each component of accumulated other comprehensive income (loss) in the three and six months ended June 30, 2023 and 2022 consisted of the following:
| Amounts Reclassified from Other Comprehensive Income (Loss) |  | Amount Reclassified from Other Comprehensive Income (Loss) |  | Consolidated Statement of Operations Line
| Three Months Ended June 30, |  | Six Months Ended June 30, |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
| (in millions) |  |
Cash flow hedges | $ | 3 |  |  | $ | (1) |  |  | $ | 4 |  |  | $ | (2) |  |  | Net sales
| 5 |  |  | 41 |  |  | 32 |  |  | 58 |  |  | Cost of goods sold
| (18) |  |  | (6) |  |  | (25) |  |  | 4 |  |  | Other, net
| (3) |  |  | (9) |  |  | (8) |  |  | (17) |  |  | Interest expense
| (1) |  |  | (5) |  |  | (3) |  |  | (8) |  |  | Income taxes
| $ | (14) |  |  | $ | 20 |  |  | $ | — |  |  | $ | 35 |  |  |
Change in retirement plans’ funded status: |  |  |  |  |  |  |  |  |
Amortization of actuarial losses | $ | 5 |  |  | $ | 6 |  |  | $ | 9 |  |  | $ | 11 |  |  | *
Amortization of prior service cost | (9) |  |  | (32) |  |  | (18) |  |  | (63) |  |  | *
| 1 |  |  | (7) |  |  | 2 |  |  | (14) |  |  | Income taxes
| $ | (3) |  |  | $ | (33) |  |  | $ | (7) |  |  | $ | (66) |  |  |
Total reclassifications, net of tax | $ | (17) |  |  | $ | (13) |  |  | $ | (7) |  |  | $ | (31) |  |  |
(*) These amounts are included in net periodic pension and other postretirement benefit cost. See “Note 6: Employee Benefit Plans and Postretirement Benefits” for additional information.
Summary of Impact of Changes in Fair Value of Fair Value Hedges and Derivatives Not Designated as Hedging Instruments on Earnings | The following table summarizes the activity in accumulated other comprehensive income related to the derivatives held by the Company during the six months ended June 30, 2023 and 2022:
(In Millions) |  | Before-Tax Amount |  | Income Tax |  | After-Tax Amount
Accumulated derivative net gain as of December 31, 2022 |  | $ | 71 |  |  | $ | (27) |  |  | $ | 44 |
Net changes in fair value of derivatives |  | (45) |  |  | 19 |  |  | (26) |
Net losses reclassified from accumulated other comprehensive income into income |  | 3 |  |  | (3) |  |  | — |
Accumulated derivative net gain as of June 30, 2023 |  | $ | 29 |  |  | $ | (11) |  |  | $ | 18 |
(In Millions) |  | Before-Tax Amount |  | Income Tax |  | After-Tax Amount
Accumulated derivative net losses as of December 31, 2021 |  | $ | (3) |  |  | $ | (14) |  |  | $ | (17) |
Impact of demerger |  | — |  |  | — |  |  | — |
Net changes in fair value of derivatives |  | (122) |  |  | 8 |  |  | (114) |
Net losses reclassified from accumulated other comprehensive income into income |  | 43 |  |  | (8) |  |  | 35 |
Accumulated derivative net losses as of June 30, 2022 |  | $ | (82) |  |  | $ | (14) |  |  | $ | (96) |
The following tables summarize the impact that changes in the fair value of fair value hedges and derivatives not designated as hedging instruments had on earnings (in millions):
|  |  |  | For the Three Months Ended June 30,
|  | Classification of Gain (Loss) |  | 2023 |  | 2022
Fair Value Hedges |  |  |  |  |  |
Interest rate derivatives |  | Interest expense |  | $ | (15) |  |  | $ | (21) |
Not Designated as Hedges |  |  |  |  |  |
Foreign exchange contracts |  | Other, Net |  | $ | (10) |  |  | $ | — |
|  |  |  | For the Six Months Ended June 30,
|  | Classification of Gain (Loss) |  | 2023 |  | 2022
Fair Value Hedges |  |  |  |  |  |
Interest rate derivatives |  | Interest expense |  | $ | 1 |  |  | $ | (76) |
Not Designated as Hedges |  |  |  |  |  |
Foreign exchange contracts |  | Other, Net |  | $ | (34) |  |  | $ | (47) |
Summary of Fair Value of Derivatives | The fair values of CNH Industrial’s derivatives as of June 30, 2023 and December 31, 2022 in the consolidated balance sheets are recorded as follows:
|  | June 30, 2023 |  | December 31, 2022
(In millions) |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives designated as hedging instruments under Subtopic 815-20 |  |  |  |  |  |  |  |
Interest rate contracts |  | Derivative assets |  | 59 |  |  | Derivative assets |  | 77 |
Foreign currency contracts |  | Derivative assets |  | 74 |  |  | Derivative assets |  | 70 |
Total derivative assets designated as hedging instruments |  |  |  | 133 |  |  |  |  | 147 |
Interest rate contracts |  | Derivative liabilities |  | 136 |  |  | Derivative liabilities |  | 106 |
Foreign currency contracts |  | Derivative liabilities |  | 60 |  |  | Derivative liabilities |  | 56 |
Total derivative liabilities designated as hedging instruments |  |  |  | 196 |  |  |  |  | 162 |
Derivatives not designated as hedging instruments under Subtopic 815-20 |  |  |  |  |  |  |  |
Interest rate contracts |  | Derivative assets |  | 34 |  |  | Derivative assets |  | 28 |
Foreign currency contracts |  | Derivative assets |  | 28 |  |  | Derivative assets |  | 14 |
Total derivative assets not designated as hedging instruments |  |  |  | 62 |  |  |  |  | 42 |
Interest rate contracts |  | Derivative liabilities |  | 34 |  |  | Derivative liabilities |  | 28 |
Foreign currency contracts |  | Derivative liabilities |  | 13 |  |  | Derivative liabilities |  | 14 |
Total derivative liabilities not designated as hedging instruments |  |  |  | 47 |  |  |  |  | 42 |
Summary of Investments Measured on Recurring Basis | The following tables present for each of the fair value hierarchy levels the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022:
| Level 1 |  | Level 2 |  | Total
| June 30, 2023 |  | December 31, 2022 |  | June 30, 2023 |  | December 31, 2022 |  | June 30, 2023 |  | December 31, 2022
| (in millions)
Assets |  |  |  |  |  |  |  |  |  |  |
Foreign exchange derivatives | $ | — |  |  | $ | — |  |  | $ | 93 |  |  | $ | 84 |  |  | $ | 93 |  |  | $ | 84 |
Interest rate derivatives | — |  |  | — |  |  | 102 |  |  | 105 |  |  | 102 |  |  | 105 |
Total Assets | $ | — |  |  | $ | — |  |  | $ | 195 |  |  | $ | 189 |  |  | $ | 195 |  |  | $ | 189 |
Liabilities |  |  |  |  |  |  |  |  |  |  |
Foreign exchange derivatives | $ | — |  |  | $ | — |  |  | $ | 170 |  |  | $ | 70 |  |  | $ | 170 |  |  | $ | 70 |
Interest rate derivatives | — |  |  | — |  |  | 73 |  |  | 134 |  |  | 73 |  |  | 134 |
Total Liabilities | $ | — |  |  | $ | — |  |  | $ | 243 |  |  | $ | 204 |  |  | $ | 243 |  |  | $ | 204 |
Summary of Investments Measured on Nonrecurring Basis | The following tables present the fair value for nonrecurring Level 3 measurements from impairments recorded in the quarter ended June 30, 2023 and 2022. No impairments were recorded during the six months ended June 30, 2023.
| Fair Value |  | Losses
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in millions)
Property, plant and equipment | $ | — |  |  | $ | 7 |  |  | $ | — |  |  | $ | 17 |
Summary of Estimated Fair Market Values | The estimated fair market values of financial instruments not carried at fair value in the consolidated balance sheets as of June 30, 2023 and December 31, 2022 were as follows:
| June 30, 2023 |  | December 31, 2022
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
| (in millions)
Financing receivables | $ | 21,541 |  |  | $ | 21,406 |  |  | $ | 19,260 |  |  | $ | 18,827 |
Debt | $ | 24,870 |  |  | $ | 24,744 |  |  | $ | 22,962 |  |  | $ | 22,651 |

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