Under U.S. GAAP a framework exists for measuring fair value, providing a three-tier hierarchy of pricing inputs used to report assets and liabilities that are adjusted to fair value. Level 1 includes inputs such as quoted prices which are available in active markets for identical assets or liabilities as of the report date. Level 2 includes inputs other than those available in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 includes unobservable pricing inputs that are not corroborated by market data or other objective sources. The Company has no recurring items valued using Level 3 inputs other than certain pension plan assets.

The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities measured at fair value and their placement within the fair value hierarchy.

The Company applies a market approach to value its commodity price hedge contracts. Prices from observable markets are used to develop the fair value of these financial instruments and they are reported under Level 2. The Company uses an income approach to value its foreign exchange forward contracts. These contracts are valued using a discounted cash flow model that calculates the present value of future cash flows under the terms of the contracts using market information as of the reporting date, such as foreign exchange spot and forward rates, and are reported under Level 2 of the fair value hierarchy.

In the normal course of business the Company is subject to risk from adverse fluctuations in currency exchange rates, interest rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial

instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes.

The Company’s objective in managing exposure to market and interest rate risk is to limit the impact on earnings and cash flow. The extent to which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk, using sales agreements that permit the pass-through of commodity price and foreign exchange rate risk to customers and borrowing both fixed and floating debt instruments to manage interest rate risk.

For derivative financial instruments accounted for in hedging relationships, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the manner in which effectiveness will be assessed. The Company formally assesses, both at inception and at least quarterly thereafter, whether the hedging relationships are effective in offsetting changes in fair value or cash flows of the related underlying exposures. When a forecasted transaction is reasonably possible, but not probable of occurring, the hedge no longer qualifies for hedge accounting and the change in fair value from the date of the last effectiveness test is recognized in earnings. Any gain or loss which has accumulated in other comprehensive income at the date of the last effectiveness test is reclassified into earnings at the same time of the underlying exposure or when the forecasted transaction becomes probable of not occurring.

The Company designates certain derivative financial instruments as cash flow hedges. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. Changes in fair value of outstanding derivatives accounted for as cash flow hedges are recorded in accumulated other comprehensive income until earnings are impacted by the hedged transaction. Classification of the gain or loss in the Consolidated Statements of Operations upon reclassification from accumulated other comprehensive income is the same as that of the underlying exposure. Contracts outstanding at December 31, 2021 mature between one and thirty-four months.

The Company also designates certain foreign exchange contracts as cash flow hedges of anticipated foreign currency denominated sales or purchases. The Company manages these risks at the operating unit level. Often, foreign currency risk is hedged together with the related commodity price risk.

The following tables set forth financial information about the impact on other comprehensive income ("OCI"), accumulated other comprehensive income ("AOCI") and earnings from changes in the fair value related to derivative instruments designated as cash flow hedges.


	Amount of gain / (loss) recognized in AOCI

Derivatives in cash flow hedges		2021		2020

Foreign exchange		$	(5)	$	—
Interest rate		2		(1)
Commodities		74		10
		$	71	$	9

	Amount of gain / (loss) reclassified from AOCI into income

Derivatives in cash flow hedges		2021		2020		Affected line item in the Statement of Operations

Foreign exchange		$	(4)	$	(3)	Net sales
Commodities		(54)		18		Net sales
Foreign exchange		2		(2)		Cost of products sold
Commodities		147		(59)		Cost of products sold
		91		(46)		(Loss) / income from continuing operations before taxes and equity in net earnings of affiliates
		(23)		13		(Benefit from) / provision for income taxes
		68		(33)		Net (loss) / income from continuing operations
Foreign exchange		—		(1)		Net (loss) / income from discontinued operations
Commodities		5		(1)		Net (loss) / income from discontinued operations
Total reclassified		$	73	$	(35)	Net (loss) / income

For the year ended December 31, 2021, a net gain of $34 ($28, net of tax) is expected to be reclassified to earnings for commodity and foreign exchange contracts. No material amounts were reclassified during the years ended December 31, 2021 and 2020 in connection with anticipated transactions that were no longer considered probable.

The Company designates certain derivative financial instruments as fair value hedges of recognized foreign-denominated assets and liabilities, generally trade accounts receivable and payable and unrecognized firm commitments. The notional values and maturity dates of the derivative instruments coincide with those of the hedged items. Changes in fair value of the derivative financial instruments, excluding time value, are offset by changes in fair value of the related hedged items.

For the years ended December 31, 2021, and December 31, 2020, the Company recorded gains of $3 and $27 from foreign exchange contracts designated as fair value hedges. These adjustments were reported within foreign exchange in the Consolidated Statements of Operations.

Certain derivative financial instruments, including foreign exchange contracts related to intercompany debt, were not designated or did not qualify for hedge accounting; however, they are effective economic hedges as the changes in their fair value, except for time value, are offset by changes from re-measurement of the related hedged items. The Company’s primary use of these derivative instruments is to offset the earnings impact that fluctuations in foreign exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. Changes in fair value of these derivative instruments are immediately recognized in earnings as foreign exchange adjustments.

The following table sets forth the impact on earnings from derivatives not designated as hedges.


	Pre-tax amount of gain / (loss) recognized in earnings

Derivatives not designated as hedges		2021		2020		Affected line item in the Statement of Operations
Foreign exchange		$	(3)	$	—	Net sales
Foreign exchange		(1)		(1)		Cost of products sold

Foreign exchange		(29)		30		Foreign exchange
Foreign exchange		—		1		Net (loss) / income from discontinued operations
		$	(33)	$	30

For the years ended December 31, 2021 and 2020, the Company recorded a gain of $103 ($103, net of tax) and a loss of $1 ($1, net of tax) in other comprehensive income for certain debt instruments that are designated as hedges of its net investment in a euro-based subsidiary. As of December 31, 2021 and December 31, 2020, cumulative gains of $69 ($92, net of tax) and losses of $33 ($10, net of tax) were recognized in accumulated other comprehensive income related to these net investment hedges and the carrying amount of the hedged net investment was approximately €1,312 ($1,493) at December 31, 2021.

The following table sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2021 and December 31, 2020, respectively. The fair value of these financial instruments were reported under Level 2 of the fair value hierarchy.


	Balance Sheet classification	December 31, 2021		December 31, 2020		Balance Sheet classification	December 31, 2021		December 31, 2020
Derivatives designated as hedging instruments
Foreign exchange contracts cash flow	Prepaid expenses and other current assets	$	3	$	5	Accrued liabilities	$	10	$	5
	Current assets held for sale	—		4		Current liabilities held for sale	—		3
	Other non-current assets	—		—		Other non-current liabilities	—		1
Foreign exchange contracts fair value	Prepaid expenses and other current assets	1		2		Accrued liabilities	2		6

Commodities contracts cash flow	Prepaid expenses and other current assets	53		43		Accrued liabilities	17		11
	Current assets held for sale	—		2		Current liabilities held for sale	—		—
	Other non-current assets	2		4		Other non-current liabilities	1		—
Interest rate contracts cash flow	Other non-current assets	—		—		Other non-current liabilities	—		2

Net investment hedge	Other non-current assets	49		7		Other non-current liabilities	—		20
		$	108	$	67		$	30	$	48
Derivatives not designated as hedging instruments


Foreign exchange contracts	Prepaid expenses and other current assets	$	3	$	9	Accrued liabilities	$	3	$	4





		$	3	$	9		$	3	$	4

Total derivatives		$	111	$	76		$	33	$	52

Certain derivative financial instruments are subject to agreements with counterparties similar to master netting arrangements and are eligible for offset. The Company has made an accounting policy election not to offset the fair values of these


	Gross amounts recognized in the Balance Sheet		Gross amounts not offset in the Balance Sheet		Net amount
Balance at December 31, 2021
Derivative assets	$	111	$	19	$	92
Derivative liabilities	33		19		14

Balance at December 31, 2020
Derivative assets	$	76	$	11	$	65
Derivative liabilities	52		11		41

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at December 31, 2021 and December 31, 2020 were:


	December 31, 2021		December 31, 2020
Derivatives designated as cash flow hedges:
Foreign exchange	$	241	$	639
Commodities	261		231
Interest rate	—		200
Derivatives designated as fair value hedges:
Foreign exchange	229		183
Derivatives designated as net investment hedges:
Foreign exchange	875		1,075
Derivatives not designated as hedges:
Foreign exchange	617		722