Derivative Financial Instruments

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Cash Flow Hedges

Our cash flow hedges include foreign currency forward contracts, commodity swaps and commodity purchase contracts. We use foreign currency forward contracts to manage currency risk associated with certain expected sales and purchases through 2031. We use commodity derivatives, such as fixed-price purchase commitments and swaps to hedge against potentially unfavorable price changes for commodities used in production. Our commodity contracts hedge forecasted transactions through 2028.

Derivative Instruments Not Receiving Hedge Accounting Treatment

We have entered into agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and non-U.S. business requirements. These agreements are derivative instruments for accounting purposes. The quantities of aluminum in these agreements offset and are priced at prevailing market prices. We also hold certain foreign currency forward contracts and commodity swaps which do not qualify for hedge accounting treatment.

Notional Amounts and Fair Values

The notional amounts and fair values of derivative instruments in the Condensed Consolidated Statements of Financial Position were as follows:


	Notional amounts (1)		Other assets		Accrued liabilities
	March 31 2024	December 31 2023	March 31 2024	December 31 2023	March 31 2024	December 31 2023
Derivatives designated as hedging instruments:
Foreign exchange contracts	$4,268	$4,120	$54	$85	($88)	($63)

Commodity contracts	479	514	78	83	(15)	(8)
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	222	254	2	1	(24)	(32)
Commodity contracts	87	115			(1)	(2)
Total derivatives	$5,056	$5,003	$134	$169	($128)	($105)
Netting arrangements			(47)	(47)	47	47
Net recorded balance			$87	$122	($81)	($58)

(1)Notional amounts represent the gross contract/notional amount of the derivatives outstanding.

(Losses)/gains associated with our hedging transactions and forward points recognized in Other comprehensive (loss)/income are presented in the following table:


	Three months ended March 31
		2024	2023
Recognized in Other comprehensive (loss)/income, net of taxes:
Foreign exchange contracts		($57)	$10
Commodity contracts		(8)	8

(Losses)/gains associated with our hedging transactions and forward points reclassified from AOCI to earnings are presented in the following table:


	Three months ended March 31
		2024	2023
Foreign exchange contracts

Costs and expenses		($7)	($2)
General and administrative expense		(4)	(11)
Commodity contracts

Costs and expenses			$17
General and administrative expense		$2	2

Gains/(losses) related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were insignificant for the three months ended March 31, 2024 and 2023.

Based on our portfolio of cash flow hedges, we expect to reclassify losses of $55 (pre-tax) out of AOCI into earnings during the next 12 months.

We have derivative instruments with credit-risk-related contingent features. If we default on our five-year credit facility, our derivative counterparties could require settlement for foreign exchange and certain commodity contracts with original maturities of at least five years. The fair value of those contracts in a net liability position at March 31, 2024 was $20. For other particular commodity contracts, our counterparties

could require collateral posted in an amount determined by our credit ratings. At March 31, 2024, there was no collateral posted related to our derivatives.