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Derivative Instruments | 6 Months Ended
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Jun. 30, 2022
Derivative Instruments [Abstract] |
Derivative Instruments | 14. Derivative instruments Cash Flow Hedge As of June 30, 2022 the Company used foreign currency exchange contracts to hedge the foreign currency effects related to the forecasted purchase of MPOS devices in U.S. dollars owed by a Brazilian subsidiary whose functional currency is the Brazilian Reais. The Company designated the foreign currency exchange contracts as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. As of June 30, 2022, the Company estimated that the whole amount of net derivative gains or losses related to its cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. In addition, the Company has entered into swap contracts to hedge the interest rate fluctuation of its financial debt issued by one of its Brazilian subsidiaries. The Company designated the swap contracts as cash flow hedges. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings within the next 12 months. Net Investment Hedge The Company used cross currency swap contracts, to reduce the foreign currency exchange risk related to its investment in its Brazilian foreign subsidiaries and the interest rate risk. This derivative was designated as a net investment hedge and, accordingly, gains and losses are reported as a component of accumulated other comprehensive income. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings in the same period that the interest expense affects earnings. Derivative instruments not designated as hedging instruments As of June 30, 2022, the Company entered into certain foreign currency exchange contracts to hedge the foreign currency fluctuations related to certain transactions denominated in U.S. dollars of certain of its Brazilian and Mexican subsidiaries, whose functional currencies are the Brazilian Reais and Mexican Peso, respectively. These transactions were not designated as hedges for accounting purposes. In addition, the Company has entered into full cross currency swap contracts to hedge the interest rate fluctuation and foreign currency fluctuations of its financial debt nominated in U.S. dollars held by its Brazilian subsidiaries that mature in 2022. These transactions were not designated as hedges for accounting purposes. Finally, as of June 30, 2022, the Company entered into swap contracts to hedge the interest rate fluctuation of its financial debt related to its credit card receivables securitization transactions. These transactions were not designated as hedges for accounting purposes. The following table presents the notional amounts of the Company’s outstanding derivative instruments:
|  | Notional Amount as of |  | Notional Amount as of
|  | June 30, 2022 |  | December 31, 2021
|  | (In millions)
Designated as hedging instrument |  |  |  |
Foreign exchange contracts | $ | 82 | $ | 89
Interest rate contracts | $ | 228 | $ | —
Cross currency swap contracts | $ | 96 | $ | 94
Not designated as hedging instrument |  |  |  |
Foreign exchange contracts | $ | 82 | $ | —
Interest rate contracts | $ | 345 | $ | 249
Cross currency swap contracts | $ | 160 | $ | 160
‎ Derivative Instrument Contracts The fair values of the Company’s outstanding derivative instruments as of June 30, 2022 and December 31, 2021 were as follows:
|  |  |  |  | June 30, |  |  | December 31,
|  | Balance sheet location |  |  | 2022 |  |  | 2021
|  |  |  | (In millions)
Derivatives |  |  |  |  |  |  |  |
Foreign exchange contracts not designated as hedging instruments |  | Other current Assets |  | $ | 2 |  | $ | —
Interest rate contracts designated as cash flow hedges |  | Other current Assets |  |  | 1 |  |  | —
Cross currency swap contracts designated as net investment hedge |  | Other non-current Assets |  |  | 1 |  |  | 7
Cross currency swap contracts not designated as hedging instruments |  | Other current Assets |  |  | — |  |  | 8
Foreign exchange contracts designated as cash flow hedges |  | Other current Assets |  |  | 1 |  |  | 2
Interest rate contracts not designated as hedging instruments |  | Other current Assets |  |  | 1 |  |  | —
Cross currency swap contracts not designated as hedging instruments |  | Other current Liabilities |  |  | 12 |  |  | 5
Cross currency swap contracts designated as net investment hedge |  | Other non-current Liabilities |  |  | 3 |  |  | —
Interest rate contracts designated as cash flow hedges |  | Other current Liabilities |  |  | 2 |  |  | —
Foreign exchange contracts designated as cash flow hedges |  | Other current Liabilities |  |  | 4 |  |  | 1
The effects of derivative contracts on the unaudited interim condensed consolidated statement of comprehensive income as of June 30, 2022 were as follows:
|  |  |  |  |  |  |  | Amount of |  | Amount of loss reclassified |  |
|  |  |  |  | December 31, |  |  | gains recognized |  | from accumulated |  | June 30,
|  |  |  |  | 2021 |  |  | in other comprehensive loss |  | other comprehensive loss |  | 2022
|  |  |  |  | (In millions)
Foreign exchange contracts designated as cash flow hedges |  |  |  |  | $ 1 |  |  | $ (9) |  | $ 4 |  | $ (4)
Interest Swap Contracts designated as cash flow hedges |  |  |  |  | — |  |  | (6) |  | 1 |  | (5)
Cross currency swap contract designated as net investment hedge |  |  |  |  | 7 |  |  | (9) |  | 4 |  | 2
|  |  |  |  | 8 |  |  | (24) |  | 9 |  | (7)
The effects of derivative contracts not designated as hedging instruments on the unaudited interim condensed consolidated statements of income for the six and three-month periods ended June 30, 2022 and 2021 were as follows:
|  | Six Months Ended June 30, |  |  | Three Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
|  | (In millions) |  |  | (In millions)
Foreign exchange contracts not designated as hedging instruments recognized in foreign exchange losses, net | $ | — |  | $ | (11) |  | $ | 5 |  | $ | (30)
Currency Swap contracts not designated as hedging instruments recognized in foreign exchange losses, net |  | (22) |  |  | — |  |  | 10 |  |  | —
‎

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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