XML 129 R15.htm IDEA: XBRL DOCUMENT
v3.24.3

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended
--- | ---
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to global market risks, including risks from changes in FX rates and changes in interest rates. Accordingly, the Company uses derivatives in certain instances to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for speculative purposes. Derivatives and non-derivative instruments designated as accounting hedges: Fair Value Hedges Interest Rate Swaps The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the SOFR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the long-term debt, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the debt. The changes in the fair value of the swaps and the underlying hedged item generally offset and the net cash settlements on the swaps are recorded each period within interest expense, net in the Company’s consolidated statements of operations. The following table summarizes the Company’s interest rate swaps designated as fair value hedges:
|  |  |  | Notional Amount |  |
Hedged Item |  | Nature of Swap |  | As of September 30, 2024 |  | As of December 31, 2023 |  | Floating Interest Rate
2014 Senior Notes due 2044 |  | Pay Floating/Receive Fixed |  | $ | 300 |  |  | $ | 300 |  |  | SOFR
2017 Senior Notes due 2028 |  | Pay Floating/Receive Fixed |  | 500 |  |  | 500 |  |  | SOFR
2018 Senior Notes due 2029 |  | Pay Floating/Receive Fixed |  | 400 |  |  | 400 |  |  | SOFR
2018 Senior Notes due 2048 |  | Pay Floating/Receive Fixed |  | 300 |  |  | 300 |  |  | SOFR
2020 Senior Notes due 2025 |  | Pay Floating/Receive Fixed |  | 300 |  |  | 300 |  |  | SOFR
2022 Senior Notes due 2052 |  | Pay Floating/Receive Fixed |  | 500 |  |  | 500 |  |  | SOFR
2022 Senior Notes due 2032 |  | Pay Floating/Receive Fixed |  | 250 |  |  | 250 |  |  | SOFR
Total |  |  |  | $ | 2,550 |  |  | $ | 2,550 |  |  |
Refer to Note 13 for information on the cumulative amount of fair value hedging adjustments included in the carrying amount of the above hedged items. The following table summarizes the impact to the statements of operations of the Company’s interest rate swaps designated as fair value hedges:
Total amounts of financial statement line item presented in the statements of operations in which the effects of fair value hedges are recorded |  | Amount of income/(loss) recognized in the consolidated statements of operations |
| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |
Interest expense, net |  | $ | (60) |  |  | $ | (66) |  |  | $ | (185) |  |  | $ | (185) |  |
Description |  | Location on Consolidated Statements of Operations |  |  |  |  |  |  |  |  |
Net interest settlements and accruals on interest rate swaps |  | Interest expense, net |  | $ | (25) |  |  | $ | (25) |  |  | $ | (74) |  |  | $ | (64) |  |
Fair value changes on interest rate swaps |  | Interest expense, net |  | $ | 79 |  |  | $ | (35) |  |  | $ | 57 |  |  | $ | (35) |  |
Fair value changes on hedged debt |  | Interest expense, net |  | $ | (79) |  |  | $ | 35 |  |  | $ | (57) |  |  | $ | 35 |  |
Net investment hedges Debt designated as net investment hedges The Company has designated €500 million of the 2015 Senior Notes Due 2027 and €750 million of the 2019 Senior Notes due 2030 as net investment hedges to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates. These hedges are designated as accounting hedges under the applicable sections of ASC Topic 815 and will end upon the repayment of the notes in 2027 and 2030, respectively, unless terminated early at the discretion of the Company. Cross currency swaps designated as net investment hedges The Company enters into cross-currency swaps to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates. The following tables provide information on the cross-currency swaps designated as net investment hedges under ASC Topic 815:
September 30, 2024
|  | Pay |  | Receive
Nature of Swap |  | Notional Amount |  | Weighted Average Interest Rate |  | Notional Amount |  | Weighted Average Interest Rate
Pay Fixed/Receive Fixed |  | € | 965 |  |  | 2.91% |  | $ | 1,014 |  |  | 4.41%
Pay Floating/Receive Floating |  | 2,138 |  |  | Based on ESTR |  | 2,250 |  |  | Based on SOFR
Total |  | € | 3,103 |  |  |  |  | $ | 3,264 |  |  |
December 31, 2023
|  | Pay |  | Receive
Nature of Swap |  | Notional Amount |  | Weighted Average Interest Rate |  | Notional Amount |  | Weighted Average Interest Rate
Pay Fixed/Receive Fixed |  | € | 765 |  |  | 3.67% |  | $ | 800 |  |  | 5.25%
Pay Floating/Receive Floating |  | 2,138 |  |  | Based on ESTR |  | 2,250 |  |  | Based on SOFR
Total |  | € | 2,903 |  |  |  |  | $ | 3,050 |  |  |
As of September 30, 2024 these hedges will expire and the notional amounts will be settled as follows unless terminated early at the discretion of the Company:
Years Ending December 31, |  | Notional Amount (Pay) |  | Notional Amount (Receive)
2026 |  | € | 450 |  |  | $ | 500 |
2027 |  | 531 |  |  | 550 |
2028 |  | 588 |  |  | 600 |
2029 |  | 573 |  |  | 614 |
2031 |  | 481 |  |  | 500 |
2032 |  | 480 |  |  | 500 |
Total |  | € | 3,103 |  |  | $ | 3,264 |
The following table provides information on the gains/(losses) on the Company’s net investment and cash flow hedges:
Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships |  | Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax |  | Amount of Loss Reclassified from AOCL into Income, net of Tax |  | Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
| Three Months Ended September 30, |  | Three Months Ended September 30, |  | Three Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Cross currency swaps |  | $ | (95) |  |  | $ | 63 |  |  | $ | — |  |  | $ | — |  |  | $ | 12 |  |  | $ | 13 |
Long-term debt |  | (41) |  |  | 30 |  |  | — |  |  | — |  |  | — |  |  | — |
Total net investment hedges |  | $ | (136) |  |  | $ | 93 |  |  | $ | — |  |  | $ | — |  |  | $ | 12 |  |  | $ | 13 |
Derivatives in Cash Flow Hedging Relationships |  |  |  |  |  |  |  |  |  |  |  |
Cross currency swap |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest rate contracts |  | — |  |  | — |  |  | (1) |  |  | (1) |  |  | — |  |  | — |
Total cash flow hedges |  | $ | — |  |  | $ | — |  |  | $ | (1) |  |  | $ | (1) |  |  | $ | — |  |  | $ | — |
Total |  | $ | (136) |  |  | $ | 93 |  |  | $ | (1) |  |  | $ | (1) |  |  | $ | 12 |  |  | $ | 13 |
Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships |  | Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax |  | Amount of Loss Reclassified from AOCL into Income, net of Tax |  | Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
| Nine Months Ended September 30, |  | Nine Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Cross currency swaps |  | $ | (20) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 34 |  |  | $ | 43 |
Long-term debt |  | (10) |  |  | 8 |  |  | — |  |  | — |  |  | — |  |  | — |
Total net investment hedges |  | $ | (30) |  |  | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 34 |  |  | $ | 43 |
Derivatives in Cash Flow Hedging Relationships |  |  |  |  |  |  |  |  |  |  |  |
Cross currency swaps |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |
Interest rate contracts |  | — |  |  | — |  |  | (2) |  |  | (2) |  |  | — |  |  | — |
Total cash flow hedges |  | $ | — |  |  | $ | — |  |  | $ | (2) |  |  | $ | (1) |  |  | $ | — |  |  | $ | — |
Total |  | $ | (30) |  |  | $ | 8 |  |  | $ | (2) |  |  | $ | (1) |  |  | $ | 34 |  |  | $ | 43 |
The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCL is as follows:
| Cumulative Gains/(Losses), net of tax
| September 30, 2024 |  | December 31, 2023
Net investment hedges |  |  |
Cross currency swaps | $ | 1 |  |  | $ | 21 |
FX forwards | 29 |  |  | 29 |
Long-term debt | (7) |  |  | 3 |
Total net investment hedges | $ | 23 |  |  | $ | 53 |
Cash flow hedges |  |  |
Interest rate contracts | $ | (43) |  |  | $ | (45) |
Cross currency swaps | 1 |  |  | 1 |
Total cash flow hedges | (42) |  |  | (44) |
Total net gain in AOCL | $ | (19) |  |  | $ | 9 |
Derivatives not designated as accounting hedges: Foreign exchange forwards The Company also enters into foreign exchange forward contracts to mitigate the change in fair value on certain assets and liabilities denominated in currencies other than a subsidiary’s functional currency. These forward contracts are not designated as accounting hedges under the applicable sections of ASC Topic 815. Accordingly, changes in the fair value of these contracts are recognized immediately in other non-operating income, net, in the Company’s consolidated statements of operations along with the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the subsidiary’s functional currency. These contracts have expiration dates at various times through July 2025. The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:
| September 30, 2024 |  | December 31, 2023
Notional amount of currency pair(1): | Sell |  | Buy |  | Sell |  | Buy
Contracts to sell USD for GBP | $ | 567 |  |  | £ | 435 |  |  | $ | 513 |  |  | £ | 407 |
Contracts to sell USD for JPY | $ | 29 |  |  | ¥ | 4,000 |  |  | $ | 14 |  |  | ¥ | 2,000 |
Contracts to sell USD for CAD | $ | 52 |  |  | C$ | 70 |  |  | $ | 147 |  |  | C$ | 200 |
Contracts to sell USD for SGD | $ | 69 |  |  | S$ | 90 |  |  | $ | 50 |  |  | S$ | 67 |
Contracts to sell USD for EUR | $ | — |  |  | € | — |  |  | $ | 60 |  |  | € | 55 |
Contracts to sell USD for INR | $ | 23 |  |  | ₹ | 1,900 |  |  | $ | 23 |  |  | ₹ | 1,900 |
Contracts to sell EUR for USD | € | 15 |  |  | $ | 17 |  |  | € | — |  |  | $ | — |
Contracts to sell USD for AUD | $ | — |  |  | A$ | — |  |  | $ | 5 |  |  | A$ | 8 |
Contracts to sell CAD for USD | C$ | — |  |  | $ | — |  |  | C$ | 25 |  |  | $ | 19 |
(1) € = euro, £ = British pound, S$ = Singapore dollar, $ = U.S. dollar, ¥ = Japanese yen, C$ = Canadian dollar, ₹= Indian Rupee, A$ = Australian dollar
Total Return Swaps The Company has entered into total return swaps to mitigate market-driven changes in the value of certain liabilities associated with the Company's deferred compensation plans. The fair value of these swaps at September 30, 2024 and related gains in the three and nine months ended September 30, 2024 were not material. The notional amount of the total return swaps as of September 30, 2024 and December 31, 2023 was $65 million and $58 million, respectively. The following table summarizes the impact to the consolidated statements of operations relating to the gains (losses) on the Company’s derivatives which are not designated as hedging instruments:
Derivatives not designated as accounting hedges |  | Location on Consolidated Statements of Operations |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
FX forwards |  | Other non-operating income, net |  |  | $ | 39 |  |  | $ | (25) |  |  | $ | 21 |  |  | $ | (10) |  |
Total return swaps |  | Operating expense |  |  | $ | 1 |  |  | $ | (2) |  |  | $ | 5 |  |  | $ | (2) |  |
Total return swaps |  | SG&A expense |  |  | $ | 1 |  |  | $ | (1) |  |  | $ | 2 |  |  | $ | (1) |  |
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges:
|  | Derivative and Non-Derivative Instruments
|  | Balance Sheet Location |  | September 30, 2024 |  | December 31, 2023
Assets: |  |  |  |  |  |
Derivatives designated as accounting hedges: |  |  |  |  |  |
Cross-currency swaps designated as net investment hedges |  | Other assets |  | $ | — |  |  | $ | 3 |
Derivatives not designated as accounting hedges: |  |  |  |  |  |
FX forwards on certain assets and liabilities |  | Other current assets |  | 17 |  |  | 13 |
Total assets |  |  |  | $ | 17 |  |  | $ | 16 |
Liabilities: |  |  |  |  |  |
Derivatives designated as accounting hedges: |  |  |  |  |  |
Interest rate swaps designated as fair value hedges |  | Accounts payable and accrued liabilities |  | $ | 6 |  |  | $ | — |
Cross-currency swaps designated as net investment hedges |  | Other liabilities |  | 207 |  |  | 183 |
Interest rate swaps designated as fair value hedges |  | Other liabilities |  | 120 |  |  | 183 |
Total derivatives designated as accounting hedges |  |  |  | 333 |  |  | 366 |
Non-derivatives designated as accounting hedges: |  |  |  |  |  |
Long-term debt designated as net investment hedge |  | Long-term debt |  | 1,395 |  |  | 1,381 |
Total liabilities |  |  |  | $ | 1,728 |  |  | $ | 1,747 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration