Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Assets and liabilities measured at fair value on a recurring basis

Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.

	September 30, 2020								December 31, 2019
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
Assets
Derivatives	$	—	$	109	$	—	$	109	$	—	$	58	$	—	$	58
Investment securities	2		1		98		101		24		—		259		283
Total assets	2		110		98		210		24		58		259		341
Liabilities
Derivatives	—		(63)		—		(63)		—		(27)		—		(27)
Total liabilities	$	—	$	(63)	$	—	$	(63)	$	—	$	(27)	$	—	$	(27)

Reconciliation of recurring Level 3 fair value measurements

The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:

	2020		2019
Balance at January 1	$	259	$	288
Purchases	10		7
Proceeds at maturity	(168)		(31)
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss)	(3)		—
Balance at September 30	$	98	$	265

Schedule of investment securities classified as available for sale

	September 30, 2020								December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investment securities
Non-U.S. debt securities (1)	$	99	$	—	$	—	$	99	$	257	$	2	$	—	$	259
Equity securities (2)	2		—		—		2		24		—		—		24
Total	$	101	$	—	$	—	$	101	$	281	$	2	$	—	$	283

⁽¹⁾All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature within two years.

⁽²⁾Gains (losses) recorded to earnings related to these securities were nil for the three months ended September 30, 2020 and 2019, respectively, and $(12) million and $1 million for the nine months ended September 30, 2020 and 2019, respectively.

Schedule of derivatives

The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.

	September 30, 2020				December 31, 2019
	Assets		(Liabilities)		Assets		(Liabilities)
Derivatives accounted for as hedges
Currency exchange contracts	$	4	$	—	$	11	$	—
Derivatives not accounted for as hedges
Currency exchange contracts and other	105		(63)		47		(27)
Total derivatives	$	109	$	(63)	$	58	$	(27)

Schedule of hedging instrument, currency exchange contract

The table below summarizes our hedging instrument activity for currency exchange contracts.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Gain (loss) recognized in AOCI	$	3	$	1	$	(5)	$	2
Gain (loss) reclassified from AOCI to earnings	2		(1)		2		(2)

Schedule of gains (losses) from derivatives not designated as hedges

The following table summarizes the gains (losses) from derivatives not designated as hedges in the condensed consolidated statements of income (loss).

Derivatives not designated as hedging instruments	Condensed consolidated statement of income caption	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Currency exchange contracts (1)	Cost of goods sold	$	5	$	(8)	$	(9)	$	(13)
Currency exchange contracts	Selling, general and administrative	32		(7)		109		(11)
Commodity derivatives	Cost of goods sold	3		2		2		2
Other derivatives	Other non-operating loss, net	—		(1)		8		1
Total (2)		$	40	$	(14)	$	110	$	(21)

⁽¹⁾Excludes losses of $14 million and gains of $1 million on embedded derivatives for the three months ended September 30, 2020 and 2019, respectively, and losses of $9 million and nil during the nine months ended September 30, 2020 and 2019, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.

⁽²⁾The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.