XML 69 R47.htm IDEA: XBRL DOCUMENT v3.10.0.1
Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
 
2018
2017
 
Level 1
Level 2
Level 3
Net Balance
Level 1
Level 2
Level 3
Net Balance
Assets
 

 

 

 
 
 
 
 
Derivatives
$
—

$
74

$
—

$
74

$
—

$
150

$
—

$
150

   Investment securities
39

—

288

327

81

8

304

393

Total assets
39

74

288

401

81

158

304

543

 
 
 
 
 
 
 
 
 
Liabilities
 

 

 

 
 
 
 
 
Derivatives
—

(82
)
—

(82
)
—

(95
)
—

(95
)
Total liabilities
$
—

$
(82
)
$
—

$
(82
)
$
—

$
(95
)
$
—

$
(95
)
Changes in the fair value of assets
The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:
 
2018
2017
Balance at beginning of year
$
304

$
—

Additions as a result of business combination
—

179

Purchases
75

186

Proceeds at maturity
(90
)
(62
)
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss)
(1
)
1

Balance at end of year
$
288

$
304
Schedule of investment securities classified as available for sale
 
2018
2017
 
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Investment securities
 

 

 

 
 
 
 
 
Non-U.S. debt securities (1)
$
288

$
—

$
—

$
288

$
310

$
2

$
—

$
312

   Equity securities (2)
39

—

—

39

81

—

—

81

Total
$
327

$
—

$
—

$
327

$
391

$
2

$
—

$
393


(1) 
All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature in four years.
(2) 
Net unrealized gains (losses) recorded to earnings related to these securities were $(25) million and $30 million for the years ended December 31, 2018 and 2017, respectively.
Schedule of derivatives
The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
 
2018
2017
 
Assets
(Liabilities)
Assets
(Liabilities)
Derivatives accounted for as hedges
 
 
 
 
Currency exchange contracts
$
—

$
(7
)
$
6

$
—

 
 
 
 
 
Derivatives not accounted for as hedges
 
 
 
 
Currency exchange contracts
74

(75
)
144

(95
)
Total derivatives
$
74

$
(82
)
$
150

$
(95
)
Carrying amount related to derivatives
The table below provides additional information about how derivatives are reflected in our consolidated and combined financial statements.
Carrying amount related to derivatives
2018
2017
Derivative assets
$
74

$
150

Derivative liabilities
(82
)
(95
)
Net derivatives
$
(8
)
$
55
Carrying amount related to derivatives
The table below provides additional information about how derivatives are reflected in our consolidated and combined financial statements.
Carrying amount related to derivatives
2018
2017
Derivative assets
$
74

$
150

Derivative liabilities
(82
)
(95
)
Net derivatives
$
(8
)
$
55
Effect of derivatives on earnings
The table below summarizes these offsets and the net effect on pre-tax earnings.
 
2018
2017
2016
 
Cash Flow Hedges
Economic Hedges
Cash Flow Hedges
Economic Hedges
Cash Flow Hedges
Economic Hedges
Effect on hedging instrument
$
(6
)
$
(4
)
$
8

$
121

$
38

$
(272
)
Effect on underlying
6

(34
)
(8
)
(152
)
(38
)
102

Effect on earnings (1)
—

(38
)
—

(31
)
—

(170
)
(1) 
For cash flow hedges, the effect on earnings, if any, is primarily related to ineffectiveness. For economic hedges on forecasted transactions, the effect on earnings is substantially offset by future earnings on economically hedged items.
Schedule of hedging instrument, currency exchange contract
The table below summarizes this activity by hedging instrument.
 
Gain (Loss) Recognized in AOCI
Gain (Loss) Reclassified from AOCI to Earnings
 
2018
2017
2016
2018
2017
2016
Currency exchange contracts
$
(6
)
$
8

$
(38
)
$
(1
)
$
(7
)
$
(37
)