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Derivative Instruments
 12 Months Ended
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,
20222021
(In millions)
Designated as hedging instrument
Foreign exchange contracts109 89 
Interest rate swap contracts229 — 
Cross currency swap contracts133 94 
Not designated as hedging instrument
Foreign exchange contracts110 — 
Interest rate swap contracts480 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 location20222021
(In millions)
Derivative Instruments
Cross currency swap contracts not designated as hedging instrumentsOther current assets— 8 
Foreign exchange contracts designated as cash flow hedgesOther current assets1 2 
Cross currency swap contracts designated as net investment hedgeOther non-current assets— 7 
Cross currency swap contracts designated as net investment hedgeOther current liabilities2 — 
Cross currency swap contracts not designated as hedging instrumentsOther current liabilities— 5 
Interest rate swap contracts designated as cash flow hedgesOther current liabilities8 — 
Cross currency swap contracts designated as fair value hedgeOther current liabilities2 — 
Interest rate swap contracts not designated as hedging instrumentsOther current liabilities1 — 
Foreign exchange contracts not designated as hedging instrumentsOther current liabilities2 — 
Foreign exchange contracts designated as cash flow hedgesOther current liabilities2 1 
Interest rate swap contracts not designated as hedging instrumentsOther non-current liabilities6 — 
Cross currency swap contracts designated as net investment hedgeOther non-current liabilities1 — 
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 lossAmount of loss reclassified from accumulated other comprehensive loss (income)December 31,
2022
(In millions)
Foreign exchange contracts designated as cash flow hedges1 (12)9 (2)
 Interest swap contracts designated as cash flow hedges— (9)7 (2)
Cross currency swap contracts designated as net investment hedge7 (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,
202220212020
(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)— —