Fair Value Hedge Liabilities



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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSThe Company has elected to present derivative contracts on a gross basis on the Unaudited Consolidated Statements of Financial Position. The following table presents the financial assets and liabilities valued on a recurring and gross basis and includes where the financial assets and liabilities are on the Unaudited Consolidated Statements of Financial Position as of June 30, 2022 and December 31, 2021.  


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| The Financial Position and Fair Value Measurements of Hedging Instruments on a Gross Basis |
| (Dollars in millions) |  |   |  |  |  |  |
| Derivative Type |  | Statements of FinancialPosition Classification |  | June 30, 2022Level 2 |  | December 31, 2021Level 2 |
| Derivatives designated as cash flow hedges: |  |   |  |   |  |   |
| Commodity contracts |  | Other current assets |  | $ | 16  |  |  | $ | 16  |  |
| Commodity contracts |  | Other noncurrent assets |  | —  |  |  | 2  |  |
| Foreign exchange contracts |  | Other current assets |  | 33  |  |  | 12  |  |
| Foreign exchange contracts |  | Other noncurrent assets |  | 14  |  |  | 6  |  |
| Forward starting interest rate swap contracts |  | Other current assets |  | 13  |  |  | 5  |  |
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| Derivatives designated as fair value hedges: |  |  |  |  |  |  |
| Fixed-for-floating interest rate swap |  | Other current assets |  | 1  |  |  | 1  |  |
| Fixed-for-floating interest rate swap |  | Other noncurrent assets |  | —  |  |  | 1  |  |
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| Derivatives designated as net investment hedges: |  |  |  |  |  |  |
| Cross-currency interest rate swaps |  | Other current assets |  | —  |  |  | 20  |  |
| Cross-currency interest rate swaps |  | Other noncurrent assets |  | 83  |  |  | 35  |  |
| Total Derivative Assets |  |  |  | $ | 160  |  |  | $ | 98  |  |
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| Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
| Commodity contracts |  | Payables and other current liabilities |  | $ | —  |  |  | $ | 1  |  |
| Commodity contracts |  | Other long-term liabilities |  | —  |  |  | 1  |  |
| Foreign exchange contracts |  | Payables and other current liabilities |  | —  |  |  | 1  |  |
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| Derivatives designated as fair value hedges: |  |  |  |  |  |  |
| Fixed-for-floating interest rate swap |  | Long-term borrowings |  | 3  |  |  | —  |  |
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| Derivatives designated as net investment hedges: |  |  |  |  |  |  |
| Cross-currency interest rate swaps |  | Other long-term liabilities |  | 2  |  |  | 5  |  |
| Total Derivative Liabilities |  |  |  | $ | 5  |  |  | $ | 8  |  |
| Total Net Derivative Assets (Liabilities) |  |   |  | $ | 155  |  |  | $ | 90  |  |

  
In addition to the fair value associated with derivative instruments designated as cash flow hedges, fair value hedges, and net investment hedges, the Company had non-derivative instruments designated as foreign currency net investment hedges with a carrying value of $1.3 billion at June 30, 2022 and $1.4 billion at December 31, 2021. The designated foreign currency-denominated borrowings are included as part of "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position.17
