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Derivative Instruments
 12 Months Ended
Dec. 31, 2019
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 derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential 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.
2019
Cash Flow
Net Investment
Non-Designated
Total
Gross notional amount
$
801

$
1,113

$
6,174

$
8,088

Maximum term in days
 
 
 
1646

Fair value:
 
 
 
 
Other current assets
$
5

$
—

$
180

$
185

Other noncurrent assets
1

40

—

41

Other current liabilities
(10
)
—

(11
)
(21
)
Other noncurrent liabilities
(2
)
—

—

(2
)
Total fair value
$
(6
)
$
40

$
169

$
203

2018
 
 
 
 
Gross notional amount
$
870

$
—

$
5,466

$
6,336

Maximum term in days
 
 
 
586

Fair value:
 
 
 
 
Other current assets
$
15

$
—

$
28

$
43

Other noncurrent assets
1

—

33

34

Other current liabilities
(5
)
—

(15
)
(20
)
Other noncurrent liabilities
—

—

—

—

Total fair value
$
11

$
—

$
46

$
57


In December 2019 and November 2018 we designated the issuance of €2,400 and €2,250 of senior unsecured notes as a net investment hedge to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries.
On December 31, 2019 the total after-tax gain in AOCI related to these designated net investment hedges was $17. We evaluate the effectiveness of our net investment hedges quarterly. We have not recognized any ineffectiveness in 2019.
In July 2019 we entered into €1.0 billion in certain forward currency contracts and designated these as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. We evaluate the effectiveness of our net investment hedges quarterly.
Net Currency Exchange Rate Gains (Losses)
Derivative Instrument
Recorded in:
2019
2018
2017
Cash Flow
Cost of sales
$
2

$
7

$
(6
)
Net Investment
Other income (expense), net
14

—

—

Non-Designated
Other income (expense), net
$
(7
)
$
(6
)
$
(9
)
 
Total
$
9

$
1

$
(15
)
Pretax gains (losses) on derivatives designated as cash flow of ($6) and net investment hedges of $27 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense) in earnings within 12 months as of December 31, 2019. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the component related to the spot-forward difference from the effectiveness assessment.
Interest Rate Hedges
In conjunction with our offering of senior unsecured notes in November 2019 we terminated cash flow hedges with gross notional amounts of €600 designated as forward starting interest rate swaps of our interest rates, the impact of which will be recognized over time as a benefit within interest expense. Pretax gains recorded in AOCI related to closed interest rate hedges of $6 are expected to be reclassified to other income (expense) in earnings within 12 months of December 31, 2019.
On December 31, 2019 we had interest rate swap agreements with notional amounts of $750 designated as forward starting interest rate swaps in anticipation of future debt issuances. Pretax gains of $17 were recorded in AOCI as of December 31, 2019. 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 these hedges is recorded in cash flow from operations.