XML 29 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Financial Instruments and Fair Value Measurements
 9 Months Ended
Sep. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments and Fair Value Measurements [Text Block]
9.     Financial Instruments and Fair Value Measurements
We are exposed to market risks, such as changes in commodity pricing, interest rates and currency exchange rates. To manage the volatility related to these exposures, we selectively enter into derivative contracts pursuant to our risk management policies.
A summary of our financial instruments, risk management policies, derivative instruments, hedging activities and fair value measurement can be found in Notes 2 and 15 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. If applicable, updates have been included in the respective sections below.
Cash and Cash Equivalents—At September 30, 2020 and December 31, 2019, we had marketable securities classified as Cash and cash equivalents of $1,191 million and $389 million, respectively.
Foreign Currency Gain (Loss)—Other income, net, in the Consolidated Statements of Income reflected foreign currency gains of $3 million and losses of $4 million, and gains of $2 million and $16 million for the three and nine months ended September 30, 2020 and 2019, respectively.
Financial Instruments Measured at Fair Value on a Recurring Basis—The following table summarizes financial instruments outstanding for the periods presented that are measured at fair value on a recurring basis:
 September 30, 2020December 31, 2019 
Millions of dollarsNotional AmountFair ValueNotional AmountFair ValueBalance Sheet Classification
Assets–
Derivatives designated as hedges:
Commodities$60 $6 $— $— Prepaid expenses and other current assets
Foreign currency358 44 — 27 Prepaid expenses and other current assets
Foreign currency— — 2,000 214 Other assets
Interest rates— 2 — 22 Prepaid expenses and other current assets
Interest rates263 3 1,940 41 Other assets
Derivatives not designated as hedges:
Commodities69 30 3 — Prepaid expenses and other current assets
Foreign currency311 4 580 5 Prepaid expenses and other current assets
Non-derivatives:
Available-for-sale debt securities359 361 162 162 Short-term investments
Equity securities— — 34 34 Short-term investments
Total$1,420 $450 $4,719 $505 
Liabilities–
Derivatives designated as hedges:
Foreign currency$— $33 $— $16 Accrued liabilities
Foreign currency2,655 225 950 53 Other liabilities
Interest rates— — 1,000 154 Accrued liabilities
Interest rates1,500 655 700 77 Other liabilities
Derivatives not designated as hedges:
Commodities125 16 224 34 Accrued liabilities
Foreign currency400 2 200 1 Accrued liabilities
Total$4,680 $931 $3,074 $335 
All financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments on the Consolidated Balance Sheets.
At September 30, 2020, our outstanding foreign currency contracts, not designated as hedges, mature from October 2020 to June 2021. Our commodity contracts, not designated as hedges, mature from October 2020 to December 2020.
Financial Instruments Not Measured at Fair Value on a Recurring Basis—The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Due to the short maturity, the fair value of all non-derivative financial instruments included in Current assets and Current liabilities for which the carrying value approximates fair value are excluded from the table below. Short-term and long-term debt are recorded at amortized cost in the Consolidated Balance Sheets. The carrying and fair values of short-term and of long-term debt exclude commercial paper and other miscellaneous debt.
September 30, 2020December 31, 2019
Millions of dollarsCarrying
Value		Fair
Value		Carrying
Value		Fair
Value
Non-derivatives:
Liabilities:
Short-term debt$138 $147 $181 $215 
Long-term debt13,755 15,132 11,609 12,561 
Total$13,893 $15,279 $11,790 $12,776 
All financial instruments in the table above are classified as Level 2.
Net Investment Hedges—The following table summarizes our net investment hedges outstanding for the periods presented:
September 30, 2020December 31, 2019
Millions of euro/dollarsNotional ValueNotional ValueExpiration Date
Equivalent
US$		Equivalent
US$
Foreign currency€917 $1,008 €617 $650 
2021 to 2027
Foreign-currency denominated debt750 878 750 842 2022
In September 2020, we entered into €300 million of foreign currency contracts that were designated as net investment hedges.
In October 2020, euro denominated debt due 2022 with notional amounts totaling €750 million previously designated as net investment hedge, were dedesignated. Concurrent with the dedesignation of the 2022 euro denominated debt, we entered into €750 million of cross currency interest rate swaps that were designated as net investment hedges. Also, in October 2020, we entered into €750 million of foreign currency contracts to economically hedge the redemption or repayment expected by November 2020 of up to €750 million aggregate principal amount of our 1.875% guaranteed notes due 2022. These foreign currency contracts were not designated as hedges.
Cash Flow Hedges—The following table summarizes our cash flow hedges outstanding for the periods presented:

September 30, 2020December 31, 2019
Millions of dollarsNotional ValueNotional ValueExpiration Date
Foreign currency$2,005 $2,300 
2021 to 2027
Interest rates1,500 1,500 
2021 to 2024
Commodities60 — 
2021 to 2022
In January 2020, we amended previously existing forward-starting interest rate swaps with a total notional amount of $1,000 million (the “Swaps”) to extend their maturities to July 2023 and April 2024. As of September 30, 2020, the Swaps were designated as cash flow hedges to mitigate the risk of variability in interest rates of future expected debt issuance by July 2023 and April 2024. Other assets as of September 30, 2020 includes $238 million of collateral held with our counterparties related to our forward-starting interest rate swaps; this amount represents the maximum amount of collateral required in accordance with the Swap agreements. Related cash flows are included in financing activities in the Consolidated Statements of Cash Flows.
In May 2020, we terminated and cash settled $2,000 million in notional value of our cross-currency interest rate swaps, designated as cash flows hedges, maturing in 2021 and 2024. Upon termination of the swaps, we received $346 million from our counterparties. Concurrent with the settlement of the swaps, we entered into $1,705 million cross-currency interest rate swaps with euro notional amounts and maturity dates matching the original swaps. The swaps are designated as cash flow hedges to reduce the variability in the functional currency equivalent cash flows of certain foreign currency denominated intercompany loans.
During the nine months ended September 30, 2020, we entered into over-the-counter commodity swaps with a total notional amount of $60 million. During the third quarter of 2020, we also entered into costless collars, which are a combination of a purchased call option with an aggregate notional volume of 4 million MMBtu and a sold put option with an aggregate notional volume of 4 million MMBtu. These transactions were designated as cash flow hedges to manage the volatility of commodity prices related to anticipated purchases of feedstock for the years 2021 and 2022.
In October 2020, we terminated and cash settled $500 million in notional value of our forward-starting interest rate swaps which were designated as cash flow hedges originally set to expire in 2021. Upon termination of the forward-starting interest rate swaps, we paid $229 million to our counterparties.
As of September 30, 2020, on a pre-tax basis, $6 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to interest expense over the next twelve months.
Fair Value Hedges—The following table summarizes our fair value hedges outstanding for the periods presented:
September 30, 2020December 31, 2019
Millions of dollarsNotional ValueNotional ValueExpiration Date
Interest rates$263 $2,140 
2022 to 2026
In January 2020, we entered into a euro fixed-for-floating interest rate swap to mitigate the change in the fair value of €100 million of our €500 million guaranteed notes due 2026 associated with the risk of variability in the 6-month EURIBOR rate, the benchmark interest rate. The fixed-rate and variable-rate components are settled annually and semi-annually, respectively.
In April 2020, we terminated $2,000 million in notional value of our fixed-for-floating interest rate swaps which were designated as fair value hedges originally set to expire in 2021 and 2027. Upon termination of the fixed-for-floating interest rate swaps, we received $147 million from our counterparties.
Impact on Earnings and Other Comprehensive Income—The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive loss (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:
 Effects of Financial Instruments
Three Months Ended September 30,
 Gain (Loss) Recognized in AOCIGain (Loss) Reclassified from AOCI to IncomeGain (Loss) Recognized in IncomeIncome Statement
Millions of dollars202020192020201920202019Classification
Derivatives designated as hedges:
Commodities$— $7 $— $(10)$— $— Sales and other operating revenues
Commodities8 (10)— 8 — — Cost of sales
Foreign currency(125)141 89 (86)8 18 Interest expense
Interest rates102 (163)1 (1)1 23 Interest expense
Derivatives not designated as hedges:
Commodities— — — — (1)(1)Sales and other operating revenues
Commodities— — — — 42 1 Cost of sales
Foreign currency— — — — (1)14 Other income, net
Non-derivatives designated as hedges:
Long-term debt(38)35 — — — — Other income, net
Total$(53)$10 $90 $(89)$49 $55 

 Effects of Financial Instruments
Nine Months Ended September 30,
 Gain (Loss) Recognized in AOCIGain (Loss) Reclassified from AOCI to IncomeGain (Loss) Recognized in IncomeIncome Statement
Millions of dollars202020192020201920202019Classification
Derivatives designated as hedges:
Commodities$— $(34)$— $(18)$— $— Sales and other operating revenues
Commodities6 28 — 12 — — Cost of sales
Foreign currency(47)192 81 (99)38 50 Interest expense
Interest rates(430)(342)3 (5)91 96 Interest expense
Derivatives not designated as hedges:
Commodities— — — — 4 2 Sales and other operating revenues
Commodities— — — — 116 (18)Cost of sales
Foreign currency— — — — (11)30 Other income, net
Non-derivatives designated as hedges:
Long-term debt(36)40 — — — — Other income, net
Total$(507)$(116)$84 $(110)$238 $160 
The derivative amounts excluded from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in other comprehensive income for the three and nine months ended September 30, 2020 were gains of $1 million and losses of less than $1 million, and for the three and nine months ended September 30, 2019 were gains of $3 million and less than $1 million, respectively.
The derivative amounts excluded from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in interest expense for the three and nine months ended September 30, 2020 were gains of $1 million and $8 million, respectively, and for the three and nine months ended September 30, 2019 were gains of $5 million and $15 million, respectively.
The pre-tax effect of the periodic receipt of fixed interest and payment of variable interest associated with our fixed-for-floating interest rate swaps resulted in less than $1 million and $3 million decrease in interest expense during the three and nine months ended September 30, 2020, respectively, and $1 million and $7 million increase in interest expense during the three and nine months ended September 30, 2019, respectively.
Investments in Available-for-Sale Debt Securities—The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of our outstanding available-for-sale debt securities:    
Millions of dollarsCostGross Unrealized GainsGross Unrealized LossesFair Value
Debt securities at September 30, 2020
$359 $2 $— $361 
Debt securities at December 31, 2019
162 — — 162 
No allowance for credit losses related to our available-for-sale debt securities was recorded for the nine months ended September 30, 2020 or for the year ended December 31, 2019.
As of September 30, 2020, bonds classified as available-for-sale debt securities had maturities between 1 month and 9 months.
The proceeds from maturities and sales of our available-for-sale-debt securities during the three and nine months ended September 30, 2020 and 2019 are summarized in the following table:

Three Months Ended
September 30,		Nine Months Ended
September 30,
Millions of dollars2020201920202019
Proceeds from maturities of available-for-sale debt securities$— $— $— $331 
Proceeds from sales of available-for-sale debt securities90 — 90 180 
No gain or loss was realized in connection with the sales of our available-for-sale debt securities during the three and nine months ended September 30, 2020. The gross realized gains and losses associated with the sale of available-for-sale debt securities during the three and nine months ended September 30, 2019 were less than $1 million in each respective period.
We had no available-for-sale debt securities which were in a continuous unrealized loss position for less than or greater than twelve months as of September 30, 2020 and December 31, 2019.
Investments in Equity Securities—Our investment in equity securities primarily consisted of limited partnership investments. At September 30, 2020, we had no outstanding investment in equity securities. At December 31, 2019, we had investments in equity securities with a notional amount and a fair value of $34 million.
We received proceeds of $313 million and $332 million related to the sale of our investments in equity securities during the nine months ended September 30, 2020 and 2019, respectively. We received proceeds of $312 million related to the sale of our investments in equity securities during the three months ended September 30, 2020. No proceeds related to the sale of investments in equity securities were received during the three months ended September 30, 2019.
The following table summarizes the portion of unrealized gains and losses for the equity securities that are outstanding for the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
Millions of dollars2020201920202019
Net gains recognized during the period$— $— $— $6 
Less: Net gains recognized during the period on securities sold— — — 9 
Unrealized losses recognized during the period$— $— $— $(3)