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Derivative Instruments | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Cash Flow Hedge As of December 31, 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 loss and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. As of December 31, 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 loss 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 loss and subsequently reclassified into earnings within the next 12 months. Fair Value Hedge The Company has entered into a swap contract to hedge the interest rate and the foreign currency exposure of its fixed-rate, foreign currency financial debt issued by one of its Brazilian subsidiaries. The Company designated the swap contract as fair value hedge. The derivative’s gain or loss is reported in earnings in the same line items as the change in the value of the financial debt due to the hedged risks. Since the terms of the interest rate swap match the terms of the hedged debt, changes in the fair value of the interest rate swap are offset by changes in the fair value of the hedged debt attributable to changes in interest rates. Accordingly, the net impact in current earnings is that the interest expense associated with the hedged debt is recorded at the floating rate. 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 loss. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive loss and subsequently reclassified into earnings in the same period that the interest expense affects earnings. Derivative instruments not designated as hedging instruments As of December 31, 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 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. These transactions were not designated as hedges for accounting purposes. Finally, as of December 31, 2022, the Company entered into swap contracts to hedge the interest rate fluctuation of certain portion of its financial debt in its Brazilian subsidiaries and VIEs. 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 December 31,
| 2022 | 2021
| (In millions)
Designated as hedging instrument |  |
Foreign exchange contracts | 109 |  | 89 |
Interest rate swap contracts | 229 |  | — |
Cross currency swap contracts | 133 |  | 94 |
Not designated as hedging instrument |  |
Foreign exchange contracts | 110 |  | — |
Interest rate swap contracts | 480 |  | 249 |
Cross currency swap contracts | — |  | 160 |
Derivative instruments contracts The fair values of the Company’s outstanding derivative instruments as of December 31, 2022 and December 31, 2021 were as follows:
|  |  | December 31,
| Balance sheet location |  | 2022 |  | 2021
|  |  | (In millions)
Derivative Instruments |  |  |  |  |
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 |
Cross currency swap contracts designated as net investment hedge | Other non-current assets |  | — |  |  | 7 |
Cross currency swap contracts designated as net investment hedge | Other current liabilities |  | 2 |  |  | — |
Cross currency swap contracts not designated as hedging instruments | Other current liabilities |  | — |  |  | 5 |
Interest rate swap contracts designated as cash flow hedges | Other current liabilities |  | 8 |  |  | — |
Cross currency swap contracts designated as fair value hedge | Other current liabilities |  | 2 |  |  | — |
Interest rate swap contracts not designated as hedging instruments | Other current liabilities |  | 1 |  |  | — |
Foreign exchange contracts not designated as hedging instruments | Other current liabilities |  | 2 |  |  | — |
Foreign exchange contracts designated as cash flow hedges | Other current liabilities |  | 2 |  |  | 1 |
Interest rate swap contracts not designated as hedging instruments | Other non-current liabilities |  | 6 |  |  | — |
Cross currency swap contracts designated as net investment hedge | Other non-current liabilities |  | 1 |  |  | — |
The effects of derivative contracts on the Consolidated Statement of Comprehensive Income as of December 31, 2022 and December 2021 were as follows:
| December 31, 2021 |  | Amount of loss recognized in other comprehensive loss |  | Amount of loss reclassified from accumulated other comprehensive loss (income) |  | December 31, 2022
| (In millions)
Foreign exchange contracts designated as cash flow hedges | 1 |  |  | (12) |  |  | 9 |  |  | (2) |
Interest swap contracts designated as cash flow hedges | — |  |  | (9) |  |  | 7 |  |  | (2) |
Cross currency swap contracts designated as net investment hedge | 7 |  |  | (12) |  |  | 4 |  |  | (1) |
| 8 |  |  | (33) |  |  | 20 |  |  | (5) |
The effect of the Company’s fair value hedge relationships on the Consolidated Statements of Income for the year ended December 31, 2022 is less than $1 million (there were no fair value hedge relationships during the years ended December 31, 2021 and 2020). The carrying amount of the hedged item for fair value hedges as of December 31, 2022 is $59 million (there were no fair value hedge relationships as of December 31, 2021 and 2020). The effect of the Company’s fair value hedge relationships on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges for the year ended December 31, 2022 is less than $1 million (there were no fair value hedge relationships during the years ended December 31, 2021 and 2020). The effects of derivative contracts not designated as hedging instruments on the Consolidated Statement of Income during the years ended December 31, 2022, 2021 and 2020 were as follows:
| Years ended December 31,
| 2022 |  | 2021 |  | 2020
| (In millions)
Foreign exchange contracts not designated as hedging instruments recognized in foreign exchange, net | (10) |  |  | (2) |  |  | 2 |
Currency swap contracts not designated as hedging instruments recognized in foreign exchange, net | (29) |  |  | 2 |  |  | — |
Interest rate contracts not designated as hedging instruments recognized in interest and other, net | (7) |  |  | — |  |  | — |

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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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