Derivative, Gain on Derivative

  
The unrealized gains and losses recognized in AOCI for our derivative instruments designated as cash flow hedges were as follows (in millions):

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Years ended December 31, |
| Derivatives in cash flow hedging relationships |  |  |  | 2021 |  | 2020 |  | 2019 |
| Foreign currency contracts |  |  |  | $ | 373  |  |  | $ | (251) |  |  | $ | 148  |  |
| Cross-currency swap contracts |  |  |  | (214) |  |  | 190  |  |  | (21) |  |
|  |  |  |  |  |  |  |  |  |
| Total unrealized gains (losses) |  |  |  | $ | 159  |  |  | $ | (61) |  |  | $ | 127  |  |

Fair value hedgesTo achieve a desired mix of fixed-rate and floating-rate debt, we entered into interest rate swap contracts that qualified for and were designated as fair value hedges. These interest rate swap contracts effectively convert fixed-rate coupons to floating-rate LIBOR-based coupons over the terms of the related hedge contracts. As of December 31, 2021 and 2020, we had interest rate swap contracts with aggregate notional amounts of $6.7 billion and $5.9 billion, respectively, that hedge certain portions of our long-term debt issuances. See Note 15, Financing arrangements, for information on our interest rate swaps.During the year ended December 31, 2021, we entered into interest rate swap contracts with an aggregate notional amount of $1.5 billion. Interest rate swaps with an aggregate notional value of $750 million were terminated in connection with the redemption of certain of our notes. The resulting gain on these terminations was immaterial.During the year ended December 31, 2020, interest rate swaps with an aggregate notional value of $3.7 billion were terminated in connection with the redemption of certain of our notes. The terminations of these interest rate swaps resulted in a gain of $40 million, recognized in Interest expense, net, in the Consolidated Statements of Income. Additionally, we terminated $5.2 billion aggregate notional amount of interest rate swaps, which resulted in receipt of $576 million from the counterparties and which was included in Net cash provided by operating activities in the Consolidated Statements of Cash Flows for the year ended December 31, 2020. This amount is being recognized as a reduction in Interest expense, net, in the Consolidated Statements of Income over the remaining life of the underlying notes. Immediately following the terminations of these interest rate swap contracts, we entered into new interest rate swap agreements at then-current interest rates on the same $5.2 billion principal amount of notes.For interest rate swap contracts that qualify for and are designated as fair value hedges, we recognize in Interest expense, net, in the Consolidated Statements of Income the unrealized gain or loss on the derivative resulting from the change in fair value during the period, as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk. If a hedging relationship involving an interest rate swap contract is terminated, the gain or loss realized on contract termination is recorded as an adjustment to the carrying value of the debt and amortized into Interest expense, net, over the remaining life of the previously hedged debt.The hedged liabilities and related cumulative-basis adjustments for fair value hedges of those liabilities were recorded in the Consolidated Balance Sheets as follows (in millions):

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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|  |  | Carrying amounts ofhedged liabilities(1) |  | Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2) |
|  |  | December 31, |  | December 31, |
| Consolidated Balance Sheets locations |  | 2021 |  | 2020 |  | 2021 |  | 2020 |
| Current portion of long-term debt |  | $ | 85  |  |  | $ | 89  |  |  | $ | 85  |  |  | $ | 89  |  |
| Long-term debt |  | $ | 6,729  |  |  | $ | 6,258  |  |  | $ | 199  |  |  | $ | 477  |  |

\_\_\_\_\_\_\_\_\_\_\_\_(1)Current portion of long-term debt includes $85 million and $89 million of carrying value with discontinued hedging relationships as of December 31, 2021 and 2020, respectively. Long-term debt includes $440 million and $525 million of carrying value with discontinued hedging relationships as of December 31, 2021 and 2020, respectively.(2)Current portion of long-term debt includes $85 million and $89 million of hedging adjustments on discontinued hedging relationships as of December 31, 2021 and 2020, respectively. Long-term debt includes $340 million and $425 million of hedging adjustments on discontinued hedging relationships as of December 31, 2021 and 2020, respectively.F-43
