XML 27 R12.htm IDEA: XBRL DOCUMENT v3.22.1
Financial Instruments
 3 Months Ended
Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Financial Instruments
We enter into derivative financial instruments to mitigate the potential impact of certain market risks, including foreign currency exchange rate risk. We use various types of derivative financial instruments, including forward contracts, options and swaps. We do not enter into or hold derivative financial instruments for trading or speculative purposes.
Our investment in ABI, whose functional currency is the Euro, exposes us to foreign currency exchange risk on the carrying value of our investment. To manage this risk, we may designate certain foreign exchange contracts, including cross-currency swap contracts and forward contracts (collectively, “foreign currency contracts”), and Euro denominated unsecured long-term notes (“foreign currency denominated debt”) as net investment hedges of our investment in ABI.
In May 2021, all outstanding foreign currency contracts matured and, at March 31, 2022 and December 31, 2021, we had no outstanding foreign currency contracts. When we have foreign currency contracts in effect, counterparties are domestic and international financial institutions. Under these contracts, we are exposed to potential losses in the event of non-performance by these counterparties. We manage our credit risk by entering into transactions with counterparties that have investment grade credit ratings, limiting the amount of exposure we have with each counterparty and monitoring the financial condition of each counterparty. The counterparty agreements contain provisions that require us to maintain an investment grade credit rating. In the event our credit rating falls below investment grade, counterparties to our foreign currency contracts can require us to post collateral.
The following table provides the aggregate carrying value and fair value of our total long-term debt:
(in millions)March 31, 2022December 31, 2021
Carrying value$27,922 $28,044 
Fair value27,670 30,459 
Our estimate of the fair value of our total long-term debt is based on observable market information derived from a third-party pricing source and is classified in Level 2 of the fair value hierarchy.
The following table provides the aggregate carrying value and fair value of our foreign currency denominated debt:
(in millions)March 31, 2022December 31, 2021
Foreign currency denominated debt
Carrying value$4,690 $4,817 
Fair value4,713 5,114 
Net Investment Hedging
The pre-tax effects of our net investment hedges on accumulated other comprehensive losses and our condensed consolidated statements of earnings were as follows:
(Gain) Loss Recognized in Accumulated Other Comprehensive Losses(Gain) Loss Recognized in
Net Earnings
For the Three Months Ended March 31,
(in millions)2022202120222021
Foreign currency contracts$— $(35)$— $(5)
Foreign currency denominated debt(128)(206)— — 
Total$(128)$(241)$— $(5)
We recognized changes in the fair value of the foreign currency contracts and in the carrying value of the foreign currency denominated debt due to changes in the Euro to U.S. dollar exchange rate in accumulated other comprehensive losses related to ABI. We recognized gains on the foreign currency contracts arising from components excluded from effectiveness testing in interest and other debt expense, net in our condensed consolidated statements of earnings based on an amortization approach.