FINANCIAL INSTRUMENTS

We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under the Derivatives and Hedging Topic of the FASB ASC and those utilized as economic hedges. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We have used derivative instruments, including swaps, forward contracts and options to manage certain foreign currency, interest rate and commodity price exposures.

The four quarter rolling average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $13.9 billion and $12.3 billion at December 31, 2014 and 2013, respectively. Additional information pertaining to foreign exchange and hedging activities is included in Note 1.

The following table summarizes the fair value of derivative instruments as of December 31, 2014 and 2013 which consist solely of foreign exchange contracts:



	Asset Derivatives				Liability Derivatives
(dollars in millions)	2014		2013		2014		2013
Derivatives designated as hedging instruments	$	3	$	59	$	248	$	103
Derivatives not designated as hedging instruments	139		31		71		54

The impact from foreign exchange derivative instruments that qualified as cash flow hedges was as follows:



	Year Ended December 31,
(dollars in millions)	2014			2013
Loss recorded in Accumulated other comprehensive loss	$	(263	)	$	(136	)
Loss reclassified from Accumulated other comprehensive loss into Product sales (effective portion)	$	96		$	25

Assuming current market conditions continue, a $121 million pre-tax loss is expected to be reclassified from Accumulated other comprehensive loss into Product sales to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months. At December 31, 2014, all derivative contracts accounted for as cash flow hedges mature by January 2017.

We recognized a gain of $51 million and $22 million in Other income, net on the Consolidated Statement of Operations from foreign exchange contracts not designated as hedging instruments in 2014 and 2013, respectively.