Table of Contents As of December 31, 2020, $14 million of deferred net gains, net of tax, included in equity (AOCI in Statement 3), are expected to be reclassified to current earnings over the next twelve months when earnings are affected by the hedged transactions. The actual amount recorded in current earnings will vary based on exchange rates at the time the hedged transactions impact earnings. The effect of derivatives not designated as hedging instruments on Statement 1 was as follows:  Years ended December 31, (Millions of dollars) Classification of Gains (Losses) 2020 2019 2018 Foreign exchange contracts Machinery, Energy & Transportation Other income (expense) $ 38 $ 13  $ (54) Financial Products Other income (expense) (112) (37) 19  Commodity contracts Machinery, Energy & Transportation Other income (expense) 11 18  (39) $ (63) $ (6) $ (74) We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. Collateral is generally not required of the counterparties or of our company under the master netting agreements. As of December 31, 2020 and 2019, no cash collateral was received or pledged under the master netting agreements. 89