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DERIVATIVES AND HEDGING ACTIVITIES Footnote
 9 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities [Note Text Block]

As a multinational company we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices.

The notional amounts of qualifying and non-qualifying financial instruments used in hedging transactions were as follows:
In millions
September 30, 2018
 
December 31, 2017
Derivatives in Cash Flow Hedging Relationships:
 
 
 
Foreign exchange contracts (a)
$
432

 
$
329

Derivatives Not Designated as Hedging Instruments:
 
 
 
Electricity contract
8

 
13

Foreign exchange contracts
9

 
10


(a)
These contracts had maturities of two years or less as of September 30, 2018.

The following table shows gains or losses recognized in AOCI, net of tax, related to derivative instruments: 
 
Gain (Loss)
Recognized in
AOCI
on Derivatives
(Effective Portion)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
In millions
2018
 
2017
 
2018
 
2017
Foreign exchange contracts
$
1

 
$
1

 
$
(18
)
 
$
9

Interest rate contracts
—

 
—

 
(2
)
 
—

Total
$
1

 
$
1

 
$
(20
)
 
$
9



During the next 12 months, the amount of the September 30, 2018 AOCI balance, after tax, that is expected to be reclassified to earnings is a loss of $8 million.

The amounts of gains and losses recognized in the statement of operations on qualifying and non-qualifying financial instruments used in hedging transactions were as follows:
 
Gain (Loss)
Reclassified from
AOCI
(Effective Portion)
Location of Gain (Loss)
Reclassified from AOCI
(Effective Portion)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
In millions
2018
 
2017
 
2018
 
2017
 
 
Derivatives in Cash Flow Hedging Relationships:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
(2
)
 
$
2

 
$
(2
)
 
$
6

 
Cost of products sold
Total
$
(2
)
 
$
2

 
$
(2
)
 
$
6

 
 

 
Gain (Loss) Recognized
Location of Gain (Loss)
In 
Statement
of Operations
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
In millions
2018
 
2017
 
2018
 
2017
 
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
 
 
 
Electricity contract
$
2

 
$
(8
)
 
$
1

 
$
(10
)
 
Cost of products sold
Foreign exchange contracts
3

 
—

 
4

 
—

 
Cost of products sold
Total
$
5

 
$
(8
)
 
$
5

 
$
(10
)
 
 


Fair Value Measurements

The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period.

The following table provides a summary of the impact of our derivative instruments in the balance sheet:

Fair Value Measurements
Level 2 – Significant Other Observable Inputs
 
 
Assets
 
Liabilities
 
In millions
September 30, 2018
 
December 31, 2017
 
September 30, 2018
 
December 31, 2017
 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
Foreign exchange contracts – cash flow
$
2

(a) 
$
11

(b)
$
21

(c)
$
1

(d)
Total derivatives designated as hedging instruments
2

  
11

 
21

  
1

  
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
Electricity contract
—


—


3

(d)
8

(e)
Foreign exchange contracts
1

(a) 
—

 
—

 
—

 
Total derivatives not designated as hedging instruments
1

  
—

 
3

  
8

  
Total derivatives
$
3

  
$
11

 
$
24

  
$
9

  
 
(a)
Included in Other current assets in the accompanying consolidated balance sheet.
(b)
Includes $10 million recorded in Other current assets and $1 million recorded in Deferred charges and other assets in the accompanying balance sheet.
(c)
Includes $16 million recorded in Other accrued liabilities and $5 million recorded in Other liabilities in the accompanying consolidated balance sheet.
(d)
Included in Other accrued liabilities in the accompanying balance sheet.
(e) Includes $5 million recorded in Other accrued liabilities and $3 million recorded in Other liabilities in the accompanying consolidated balance sheet.

The above contracts are subject to enforceable master netting arrangements that provide rights of offset with each counterparty when amounts are payable on the same date in the same currency or in the case of certain specified defaults. Management has made an accounting policy election to not offset the fair value of recognized derivative assets and derivative liabilities in the balance sheet. The amounts owed to the counterparties and owed to the Company are considered immaterial with respect to each counterparty and in the aggregate with all counterparties.