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171
Table of Contents
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Fair Value of Derivative Instruments
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Dec 31, 2016
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In millions
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Balance Sheet Classification 1
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Gross
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Counterparty and Cash Collateral Netting 2
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Net Amounts Included in the Consolidated Balance Sheet
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Asset derivatives:
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|
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Derivatives designated as hedging instruments
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|
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Foreign currency contracts
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Other current assets
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$
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90
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$
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(47
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)
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$
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43
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Commodity contracts
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Other current assets
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42
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(14
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)
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28
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Commodity contracts
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Deferred charges and other assets
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10
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(3
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)
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7
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Total
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$
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142
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$
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(64
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)
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$
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78
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Derivatives not designated as hedging instruments
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|
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Foreign currency contracts
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Other current assets
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$
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103
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$
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(62
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)
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$
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41
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Commodity contracts
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Other current assets
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13
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(2
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)
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11
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Commodity contracts
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Deferred charges and other assets
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12
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(2
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)
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10
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Total
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$
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128
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$
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(66
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)
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$
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62
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Total asset derivatives
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$
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270
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$
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(130
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)
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$
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140
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Liability derivatives:
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Derivatives designated as hedging instruments
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|
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Interest rate swaps
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Accrued and other current liabilities
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$
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3
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$
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—
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$
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3
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Interest rate swaps
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Other noncurrent obligations
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2
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—
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2
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Foreign currency contracts
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Accrued and other current liabilities
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55
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(47
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)
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8
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Commodity contracts
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Accrued and other current liabilities
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32
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(14
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)
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18
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Commodity contracts
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Other noncurrent obligations
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196
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(3
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)
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193
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Total
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$
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288
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$
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(64
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)
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$
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224
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Derivatives not designated as hedging instruments
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|
|
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Foreign currency contracts
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Accrued and other current liabilities
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$
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84
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$
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(62
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)
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$
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22
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Commodity contracts
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Accrued and other current liabilities
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4
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(2
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)
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2
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Commodity contracts
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Other noncurrent obligations
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2
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(2
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)
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—
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Total
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$
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90
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$
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(66
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)
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$
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24
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Total liability derivatives
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$
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378
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$
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(130
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)
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$
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248
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1.
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Updated to conform with the current year presentation.
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2.
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Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between Dow and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
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Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding liabilities. The Company posted cash collateral of $26 million at December 31, 2017 (less than $1 million of cash collateral at December 31, 2016 ).
172
Table of Contents
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Effect of Derivative Instruments
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Amount of gain (loss) recognized in OCI 1 (Effective portion)
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Amount of gain (loss) recognized in income 2, 3
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Income Statement Classification
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In millions
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2017
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2016
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2015
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2017
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2016
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2015
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Derivatives designated as hedging instruments:
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|
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|
|
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Fair value hedges:
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Interest rate swaps
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$
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—
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$
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—
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$
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—
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$
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(2
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)
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$
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—
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$
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—
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Interest expense and amortization of debt discount 4
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Cash flow hedges:
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Interest rate swaps
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2
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2
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2
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4
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6
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9
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Interest expense and amortization of debt discount 4
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Foreign currency contracts
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(30
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)
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8
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123
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7
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(5
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)
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68
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Cost of sales
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Foreign currency contracts
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(5
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)
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25
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—
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(17
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)
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(13
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)
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—
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Sundry income (expense) - net
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Commodity contracts
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38
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55
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(247
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)
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7
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(28
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)
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(91
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)
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Cost of sales
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Net investment hedges:
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Foreign currency contracts
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(73
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)
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5
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—
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—
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—
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—
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Total derivatives designated as hedging instruments
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$
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(68
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)
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$
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95
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|
$
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(122
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)
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$
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(1
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)
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$
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(40
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)
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$
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(14
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)
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Derivatives not designated as hedging instruments:
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|
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Foreign currency contracts
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$
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—
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|
$
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—
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$
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—
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$
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(198
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)
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$
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(180
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)
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$
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(318
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)
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Sundry income (expense) - net
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Commodity contracts
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—
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—
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—
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(9
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)
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6
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4
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Cost of sales
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Total derivatives not designated as hedging instruments
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$
|
—
|
|
$
|
—
|
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$
|
—
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$
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(207
|
)
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$
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(174
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)
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$
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(314
|
)
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Total derivatives
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$
|
(68
|
)
|
$
|
95
|
|
$
|
(122
|
)
|
$
|
(208
|
)
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$
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(214
|
)
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$
|
(328
|
)
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1.
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OCI is defined as "Other comprehensive income (loss)."
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2.
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For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from AOCL into income during the period. For the years ended December 31, 2017 , 2016 and 2015 , there was no material ineffectiveness with regard to the Company's cash flow hedges.
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3.
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Pretax amounts.
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4.
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Gain recognized in income of derivative is offset to zero by gain (loss) recognized in income of the hedged item.
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173
Table of Contents
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