Cash flow hedges The Company uses interest rate swaps to hedge the variability in cash flows from variable rate financial instruments and forecasted transactions. The Company also uses cross currency swaps and foreign currency forward contracts to hedge the variability from foreign currency financial instruments and foreign currency expenses. Total return swaps are used to hedge the variability in cash flows associated with certain stock-based compensation awards. Inflation swaps are used to reduce inflation risk generated from inflation- indexed liabilities. The effects of derivatives in cash flow hedging relationships on the Consolidated Statements of Income and the Consolidated Statements of Comprehensive Income are shown in the following table. Gains (losses) Gains (losses) reclassified Ineffectiveness Hedged items in qualifying deferred in from AOCI into recognized in cash flow hedging AOCI on investment investment For the year ended December 31, 2022 relationships derivatives income income Foreign currency swaps Fixed rate assets $ (1) $ (1) $ – Floating rate liabilities 175 (49) – Fixed rate liabilities 34 35 – Equity contracts Stock-based compensation 2 6 – Total $ 210 $ (9) $ – Gains (losses) Gains (losses) reclassified Ineffectiveness Hedged items in qualifying deferred in from AOCI into recognized in cash flow hedging AOCI on investment investment For the year ended December 31, 2021 relationships derivatives income income Foreign currency swaps Fixed rate assets $ (1) $ (1) $ – Floating rate liabilities 89 3 – Fixed rate liabilities (19) (21) – Equity contracts Stock-based compensation 5 5 – Total $ 74 $ (14) $ – The Company anticipates that net losses of approximately $9 will be reclassified from AOCI to net income within the next 12 months. The maximum time frame for which variable cash flows are hedged is 14 years. Hedges of net investments in foreign operations The Company primarily uses forward currency contracts, cross currency swaps and non-functional currency denominated debt to manage its foreign currency exposures to net investments in foreign operations. The effects of net investment hedging relationships on the Consolidated Statements of Income and the Consolidated Statements of Other Comprehensive Income are shown in the following table. Gains (losses) Ineffectiveness reclassified from recognized in Gains (losses) AOCI into investment For the year ended December 31, 2022 deferred in AOCI investment income income Non-functional currency denominated debt $(458) $ – $ – Forward contracts 14 – – Total $(444) $ – $ – Gains (losses) Ineffectiveness reclassified from recognized in Gains (losses) AOCI into investment For the year ended December 31, 2021 deferred in AOCI investment income income Non-functional currency denominated debt $ 61 $ – $ – Forward contracts 59 – – Total $120 $– $– 172 | 2022AnnualReport | NotestoConsolidatedFinancialStatements