The Company, at times, uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and component purchases. At September 30, 2022 and December 31, 2021, the Company had no material commodity derivative contracts.

The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to optimize its interest costs. The Company, at times, selectively uses interest rate swaps and options to reduce market value risk associated with changes in interest rates (fair value hedges and cash flow hedges). At September 30, 2022 and December 31, 2021, the Company had no outstanding interest rate swaps or options.

The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. In addition, the Company uses foreign currency forward contracts to hedge exposure associated with its net investment in certain foreign operations (net investment hedges). Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency. At September 30, 2022 and December 31, 2021, the following foreign currency derivative contracts were outstanding and mature through the ending duration noted below:

Foreign currency derivatives (in millions)*

Functional Currency

Traded Currency

Notional in traded currency
September 30, 2022

Notional in traded currency
December 31, 2021

Ending Duration

Brazilian Real

US Dollar

Dec - 23

British Pound

Euro

Oct - 22

Chinese Renminbi

British Pound

Dec - 23

Chinese Renminbi

Euro

Dec - 23

Chinese Renminbi

US Dollar

198

185

Dec - 23

Euro

British Pound

Dec - 23

Euro

Polish Zloty

297

394

Dec - 23

Euro

US Dollar

Dec - 23

US Dollar

British Pound

Dec - 23

US Dollar

Euro

Dec - 22

US Dollar

Korean Won

106,091

49,919

Nov - 23

US Dollar

Mexican Peso

2,364

2,619

Dec - 23

US Dollar

Singapore Dollar

Dec - 22

US Dollar

Thailand Baht

1,790

1,720

May - 23

*Table above excludes non-significant traded currency pairings with total notional amounts less than $10 million U.S. dollar equivalent as of September 30, 2022 and December 31, 2021.

The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated with its net investment in certain foreign operations (net investment hedges). In May 2022, the Company terminated its $100 million cross-currency swap contract originally maturing in February 2023 and executed a $100 million cross-currency swap contract to mature in February 2029, resulting in cash proceeds of $16 million that are expected to remain in accumulated other comprehensive loss until the net investment is sold, completely liquidated or substantially liquidated. At September 30, 2022 and December 31, 2021, the following cross-currency swap contracts were outstanding:


	Cross-currency swaps
(in millions)	September 30, 2022		December 31, 2021		Ending duration
US dollar to Euro:
Fixed receiving notional	$	1,100	$	1,100	Jul - 27
Fixed paying notional	€	976	€	976	Jul - 27
US dollar to Euro:
Fixed receiving notional	$	500	$	500	Mar - 25
Fixed paying notional	€	450	€	450	Mar - 25
US dollar to Japanese yen:
Fixed receiving notional	$	—	$	100	Feb - 23
Fixed paying notional	¥	—	¥	10,978	Feb - 23
Fixed receiving notional	$	100	$	—	Feb - 29
Fixed paying notional	¥	12,724	¥	—	Feb - 29

At September 30, 2022 and December 31, 2021, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815:


(in millions)	Assets					Liabilities
Derivatives designated as hedging instruments Under 815:	Location	September 30, 2022		December 31, 2021		Location	September 30, 2022		December 31, 2021
Foreign currency	Prepayments and other current assets	$	17	$	7	Other current liabilities	$	6	$	8
Foreign currency	Other non-current assets	$	2	$	—	Other non-current liabilities	$	1	$	—
Net investment hedges	Other non-current assets	$	167	$	8	Other non-current liabilities	$	—	$	54



Derivatives not designated as hedging instruments:
Foreign currency	Prepayments and other current assets	$	15	$	6	Other current liabilities	$	3	$	—
Foreign currency	Other non-current assets	$	2	$	—	Other non-current liabilities	$	—	$	—

Effectiveness for cash flow hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into accumulated other comprehensive income (loss) (“AOCI”) and reclassified into income as the underlying operating transactions are recognized. These realized gains or losses offset the hedged transaction and are recorded on the same line in the statement of operations. The initial value of any component excluded from the assessment of effectiveness will be recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method will be recognized in AOCI.

Effectiveness for net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into foreign currency translation adjustments and only released when the subsidiary being hedged is sold or substantially liquidated. The initial value of any component excluded from the assessment of effectiveness will be recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method will be recognized in AOCI.

The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less for designated net investment hedges. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at September 30, 2022 market rates.


(in millions)	Deferred gain (loss) in AOCI at				Gain (loss) expected to be reclassified to income in one year or less
Contract Type	September 30, 2022		December 31, 2021
Net investment hedges:
Foreign currency	$	(4)	$	(10)	$	—
Cross-currency swaps	167		(46)		—
Foreign currency-denominated debt	222		66		—
Total	$	385	$	10	$	—


	Three Months Ended September 30, 2022
(in millions)	Net sales		Cost of sales		Selling, general and administrative expenses		Other comprehensive income (loss)
Total amounts of earnings and other comprehensive income (loss) line items in which the effects of cash flow hedges are recorded	$	4,060	$	3,254	$	397	$	(262)
Gain (loss) on cash flow hedging relationships:
Foreign currency:
Gain (loss) recognized in other comprehensive income							$	8








	Nine Months Ended September 30, 2022
(in millions)	Net sales		Cost of sales		Selling, general and administrative expenses		Other comprehensive income (loss)
Total amounts of earnings and other comprehensive income (loss) line items in which the effects of cash flow hedges are recorded	11,693		9,425		1,179		$	(527)
Gain (loss) on cash flow hedging relationships:
Foreign currency:
Gain (loss) recognized in other comprehensive income							$	12
Gain (loss) reclassified from AOCI to income	$	—	$	(1)	$	—


	Three Months Ended September 30, 2021
(in millions)	Net sales		Cost of sales		Selling, general and administrative expenses		Other comprehensive income (loss)
Total amounts of earnings and other comprehensive income (loss) line items in which the effects of cash flow hedges are recorded	$	3,416	$	2,766	$	343	$	(73)
Gain (loss) on cash flow hedging relationships:
Foreign currency:
Gain (loss) recognized in other comprehensive income							$	(2)
Gain (loss) reclassified from AOCI to income	$	—	$	(1)	$	—







	Nine Months Ended September 30, 2021
(in millions)	Net sales		Cost of sales		Selling, general and administrative expenses		Other comprehensive income (loss)
Total amounts of earnings and other comprehensive income (loss) line items in which the effects of cash flow hedges are recorded	$	11,183	$	8,953	$	1,084	$	(95)
Gain (loss) on cash flow hedging relationships:
Foreign currency:
Gain (loss) recognized in other comprehensive income							$	(5)
Gain (loss) reclassified from AOCI to income	$	—	$	(2)	$	—

The gains or losses recorded in income related to components excluded from the assessment of effectiveness for derivative instruments designated as cash flow hedges were immaterial for the periods presented.


(in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Net investment hedges	2022		2021		2022		2021
Foreign currency	$	3	$	—	$	6	$	(6)
Cross-currency swaps	$	94	$	43	$	229	$	90
Foreign currency-denominated debt	$	67	$	27	$	156	$	64

Derivatives designated as net investment hedge instruments, as defined by ASC Topic 815, held during the period resulted in the following gains recorded in Interest expense on components excluded from the assessment of effectiveness:

There were no gains or losses recorded in income related to components excluded from the assessment of effectiveness for foreign currency-denominated debt designated as net investment hedges. There were no gains and losses reclassified from AOCI for net investment hedges during the periods presented.

Derivatives not designated as hedging instruments are used to hedge remeasurement exposures of monetary assets and liabilities denominated in currencies other than the operating units' functional currency. These derivatives resulted in the following gains recorded in income:


(in millions)		Three Months Ended September 30,				Nine Months Ended September 30,
Contract Type	Location	2022		2021		2022		2021
Foreign Currency	Selling, general and administrative expenses	$	16	$	6	$	22	$	11