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Derivative Instruments
 12 Months Ended
Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
DERIVATIVE INSTRUMENTS
Foreign Currency Hedges
We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both long-term intercompany loans payable and forward exchange contracts) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings and cash flow. We do not enter into derivative instruments for speculative purposes.
 
Designated
 
Non-Designated
 
Total
2016
 
 
Gross notional amount
$
1,058

 
$
2,841

 
$
3,899

Maximum term in days
 
 
 
 
548

Fair value:
 
 
 
 
 
Other current assets
$
24

 
$
17

 
$
41

Other noncurrent assets
4

 
—

 
4

Other current liabilities
(9
)
 
(7
)
 
(16
)
Other noncurrent liabilities
(2
)
 
—

 
(2
)
Total fair value
$
17

 
$
10

 
$
27

2015
 
 
 
 
 
Gross notional amount
$
889

 
$
4,061

 
$
4,950

Maximum term in days
 
 
 
 
546

Fair value:
 
 
 
 
 
Other current assets
$
27

 
$
41

 
$
68

Other noncurrent assets
1

 
—

 
1

Other current liabilities
(6
)
 
(3
)
 
(9
)
Other noncurrent liabilities
(1
)
 
—

 
(1
)
Total fair value
$
21

 
$
38

 
$
59


On December 31, 2016 the total after-tax amount in AOCI related to our designated net investment hedges was $48. We evaluate the effectiveness of our net investment hedges quarterly and did not recognize any ineffectiveness in 2016.
We are exposed to credit loss in the event of nonperformance by counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum exposure to loss is the asset balance of the instrument.
Net Currency Exchange Rate Gains (Losses)
Recorded in:
2016
2015
2014
Cost of sales
$
—

$
19

$
1

Other income (expense), net
(19
)
(22
)
(8
)
Total
$
(19
)
$
(3
)
$
(7
)

On December 31, 2016 pretax gains on derivatives designated as hedges that were recorded in AOCI are expected to be reclassified to earnings in the next 12 months were less than $1 compared with $17 on December 31, 2015. This reclassification is primarily due to the sale of inventory that includes previously hedged purchases. There were no ineffective portions of derivatives that resulted in gains or losses in any of the periods presented.
Interest Rate Hedges
On December 31, 2016 we had interest rate swaps with notional amounts of $600 designated as forward starting interest rate swaps in anticipation of future debt issuances. The market value of outstanding interest rate swap agreements on December 31, 2016 was $48, which was recorded in other long term assets with an offsetting amount recorded in AOCI. Upon the probable issuance of the debt, these amounts will be released to interest expense over the term of the debt. The cash flow effect of this hedge is recorded in cash flow from operations.
In 2016 we terminated multiple designated interest rate cash flow hedges, recognized $7 in OCI related to hedges on our debt issuances and recognized a nominal amount of ineffectiveness in interest expense. The remaining amounts in AOCI will be reclassified to interest expense over the term of the debt. The cash flow effect of these hedges is recognized in cash flow from operations.
On December 31, 2016 we had interest rate swaps with gross notional amounts of $500 designated as fair value hedges of underlying fixed rate obligations representing a portion of our $600 senior unsecured notes due in 2024. There was no hedge ineffectiveness recorded as a result of these fair value hedges.
Fair Value Interest Rate Hedge Instruments
 
2016
 
2015
Gross notional amount
$
500

 
$
500

Fair value:
 
 
 
Other noncurrent assets
9

 
15

Long-term debt
(9
)
 
(15
)
Total
$
—

 
$
—