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FINANCIAL INSTRUMENTS (Tables)
 9 Months Ended
Sep. 30, 2019
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 on accumulated other comprehensive income (loss) and net income during the three months and nine months ended September 30, 2019 and 2018 (in millions):
 
 
 
 
Recognized in Net Income
For the Three Months Ended September 30,
 
Gain (Loss) Recognized in Accumulated Other Comprehensive Income
 
Classification of Gain (Loss)
 
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
2019
 
 
 
 
 
 
Foreign exchange contracts
 
$
(42
)
 
 
 
 
 
 
 
 
Net sales
 
2

 
 
 
 
Cost of goods sold
 
(17
)
 
 
 
 
Other, Net
 
(3
)
Interest rate contracts
 
(6
)
 
Interest expense
 
(3
)
Total
 
$
(48
)
 
 
 
$
(21
)
2018
 
 
 
 
 
 
Foreign currency contracts
 
$
20

 
 
 
 
 
 
 
 
Net sales
 
(2
)
 
 
 
 
Cost of goods sold
 
(6
)
 
 
 
 
Other, Net
 
10

Interest rate contracts
 
(4
)
 
Interest expense
 
(2
)
Total
 
$
16

 
 
 
$
—

 
 
 
 
Recognized in Net Income
For the Nine Months Ended September 30,
 
Gain (Loss) Recognized in Accumulated Other Comprehensive Income
 
Classification of Gain (Loss)
 
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
2019
 
 
 
 
 
 
Foreign exchange contracts
 
(87
)
 
 
 
 
 
 
 
 
Net sales
 
(2
)
 
 
 
 
Cost of goods sold
 
(46
)
 
 
 
 
Other, Net
 
(10
)
Interest rate contracts
 
(26
)
 
Interest expense
 
(6
)
Total
 
(113
)
 
 
 
$
(64
)
2018
 
 
 
 
 
 
Foreign currency contracts
 
31

 
 
 
 
 
 
 
 
Net sales
 
(1
)
 
 
 
 
Cost of goods sold
 
14

 
 
 
 
Other, Net
 
24

Interest rate contracts
 
9

 
Interest expense
 
(4
)
Total
 
$
40

 
 
 
$
33



Significant amounts reclassified out of each component of accumulated other comprehensive income (loss) in the three and nine months ended September 30, 2019 and 2018 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 September 30,
 
Nine Months Ended September 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
 
 
(in millions)
 
(in millions)
 
 
Cash flow hedges
$
(2
)
 
$
2

 
$
2

 
$
1

 
Net sales
 
17

 
6

 
46

 
(14
)
 
Cost of goods sold
 
3

 
(10
)
 
10

 
(24
)
 
Other, net
 
3

 
2

 
6

 
4

 
Interest expense
 
(4
)
 
1

 
(10
)
 
5

 
Income taxes
 
$
17

 
$
1

 
$
54

 
$
(28
)
 
 
Change in retirement plans’ funded status:
 
 
 
 
 
 
 
 
 
Amortization of actuarial losses
$
18

 
$
20

 
$
52

 
$
62

 
*
Amortization of prior service cost
(32
)
 
(30
)
 
(91
)
 
(52
)
 
*
 
(4
)
 
(3
)
 
(14
)
 
2

 
Income taxes
 
$
(18
)
 
$
(13
)
 
$
(53
)
 
$
12

 
 
Total reclassifications, net of tax
$
(1
)
 
$
(12
)
 
$
1

 
$
(16
)
 
 
(*) 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 nine months ended September 30, 2019 and 2018:
In Millions
 
Before-Tax Amount
 
Income Tax
 
After-Tax Amount
Accumulated derivative net losses as of December 31, 2018
 
$
(23
)
 
$
1

 
$
(22
)
Net changes in fair value of derivatives
 
(113
)
 
20

 
(93
)
Net losses reclassified from accumulated other comprehensive income into income
 
64

 
(10
)
 
54

Accumulated derivative net losses as of September 30, 2019
 
$
(72
)
 
$
11

 
$
(61
)

In Millions
 
Before-Tax Amount
 
Income Tax
 
After-Tax Amount
Accumulated derivative net losses as of December 31, 2017
 
$
1

 
$
—

 
$
1

Net changes in fair value of derivatives
 
40

 
(2
)
 
38

Net losses reclassified from accumulated other comprehensive income into income
 
(33
)
 
5

 
(28
)
Accumulated derivative net losses as of September 30, 2018
 
$
8

 
$
3

 
$
11


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 and nine months ended September 30, 2019:
 
 
 
 
For the Three Months Ended September 30,
 
 
Classification of Gain
 
2019
 
2018
Fair Value Hedges
 
 
 
 
 
 
Interest rate derivatives
 
Interest expense
 
$
7

 
$
(3
)
 
 
 
 
 
 
 
Not Designated as Hedges
 
 
 
 
 
 
Foreign exchange contracts
 
Other, Net
 
$
29

 
$
24


 
 
 
 
For the Nine Months Ended September 30,
 
 
Classification of Gain
 
2019
 
2018
Fair Value Hedges
 
 
 
 
 
 
Interest rate derivatives
 
Interest expense
 
$
38

 
$
(13
)
 
 
 
 
 
 
 
Not Designated as Hedges
 
 
 
 
 
 
Foreign exchange contracts
 
Other, Net
 
$
(39
)
 
$
133
Summary of Fair Value of Derivatives
The fair values of CNH Industrial’s derivatives as of September 30, 2019 and December 31, 2018 in the condensed consolidated balance sheets are recorded as follows:
 
 
September 30, 2019
 
December 31, 2018
in millions of dollars
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments under Subtopic 815-20
 
 
 
 
 
 
 
 
Interest rate contracts
 
Derivative assets
 
61

 
Derivative assets
 
21

Foreign currency contracts
 
Derivative assets
 
38

 
Derivative assets
 
52

Total derivative assets designated as hedging instruments
 
 
 
99

 
 
 
73

Interest rate contracts
 
Derivative liabilities
 
44

 
Derivative liabilities
 
29

Foreign currency contracts
 
Derivative liabilities
 
80

 
Derivative liabilities
 
41

Total derivative liabilities designated as hedging instruments
 
 
 
124

 
 
 
70

Derivatives not designated as hedging instruments under Subtopic 815-20
 
 
 
 
 
 
 
 
Interest rate contracts
 
Derivative assets
 
—

 
Derivative assets
 
1

Foreign currency contracts
 
Derivative assets
 
36

 
Derivative assets
 
24

Total derivative assets not designated as hedging instruments
 
 
 
36

 
 
 
25

Interest rate contracts
 
Derivative liabilities
 
—

 
Derivative liabilities
 
—

Foreign currency contracts
 
Derivative liabilities
 
8

 
Derivative liabilities
 
38

Total derivative liabilities not designated as hedging instruments
 
 
 
8

 
 
 
38
Summary of Fair Value Hierarchy Levels
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 September 30, 2019 and December 31, 2018:
 
Level 1
 
Level 2
 
Total
 
September 30, 2019
 
December 31, 2018
 
September 30, 2019
 
December 31, 2018
 
September 30, 2019
 
December 31, 2018
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivatives
$
—

 
$
—

 
$
74

 
$
76

 
$
74

 
$
76

Interest rate derivatives
—

 
—

 
61

 
22

 
61

 
22

Investments
1

 
1

 
—

 
—

 
1

 
1

Total Assets
$
1


$
1


$
135


$
98


$
136


$
99

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivatives
$
—

 
$
—

 
$
(88
)
 
$
(79
)
 
$
(88
)
 
$
(79
)
Interest rate derivatives
—

 
—

 
(44
)
 
(29
)
 
(44
)
 
(29
)
Total Liabilities
$
—


$
—


$
(132
)

$
(108
)

$
(132
)

$
(108
)
Summary of Estimated Fair Market Values
The estimated fair market values of financial instruments not carried at fair value in the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 are as follows:
 
September 30, 2019
 
December 31, 2018
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
(in millions)
Financing receivables
$
18,455

 
$
18,345

 
$
19,167

 
$
19,017

Debt
$
23,906

 
$
24,366

 
$
24,445

 
$
24,481