XML 38 R21.htm IDEA: XBRL DOCUMENT
v3.21.2

Derivatives and Hedging | 6 Months Ended
--- | ---
Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging | Derivatives and Hedging The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers or other transactions denominated in a currency that differs from its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 90-day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income (expense) in the Condensed Consolidated Statements of Income. The notional and fair values of derivative instruments are as follows (in millions):
| Notional Amount |  | Net Amount of Derivative Assets Presented in the Statements of Financial Position (1) |  | Net Amount of Derivative Liabilities Presented in the Statements of Financial Position (2)
| June 30, 2021 |  | December 31, 2020 |  | June 30, 2021 |  | December 31, 2020 |  | June 30, 2021 |  | December 31, 2020
Foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |
Accounted for as hedges | $ | 619 |  |  | $ | 633 |  |  | $ | 40 |  |  | $ | 33 |  |  | $ | — |  |  | $ | — |
Not accounted for as hedges (3) | 516 |  |  | 367 |  |  | — |  |  | 1 |  |  | 1 |  |  | 1 |
Total | $ | 1,135 |  |  | $ | 1,000 |  |  | $ | 40 |  |  | $ | 34 |  |  | $ | 1 |  |  | $ | 1 |
(1)Included within Other current assets ($25 million at June 30, 2021 and $11 million at December 31, 2020) or Other non-current assets ($15 million at June 30, 2021 and $23 million at December 31, 2020). (2)Included within Other current liabilities ($1 million at June 30, 2021 and December 31, 2020). (3)These contracts typically are for 90-day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date. The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements are as follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
(Loss) gain recognized in Accumulated other comprehensive loss | $ | (2) |  |  | $ | (2) |  |  | $ | 11 |  |  | $ | (13) |
The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss to the Condensed Consolidated Statements of Income are as follows (in millions):
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2021 |  | 2020 |  | 2021 |  | 2020
Total revenue |  | $ | — |  |  | $ | (5) |  |  | $ | (1) |  |  | $ | (9) |
Compensation and benefits |  | — |  |  | (1) |  |  | — |  |  | (1) |
Interest expense |  | — |  |  | — |  |  | — |  |  | (1) |
Total |  | $ | — |  |  | $ | (6) |  |  | $ | (1) |  |  | $ | (11) |
The Company estimates that approximately $12 million of pretax gains currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next twelve months. During the three and six months ended June 30, 2021, the Company recorded a gain of $15 million and $8 million, respectively, in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. During the three and six months ended June 30, 2020, the Company recorded a loss of $3 million and $38 million, respectively, in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. Net Investments in Foreign Operations Risk Management The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. The Company has designated a portion of its euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive loss, to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments is also recorded in Accumulated other comprehensive loss. Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive loss into earnings during the period of change. The Company had no outstanding euro-denominated commercial paper at June 30, 2021 and December 31, 2020 designated as a hedge of the foreign currency exposure of its net investment in its European operations. The unrealized gain recognized in Accumulated other comprehensive loss related to the net investment non-derivative hedging instrument was $29 million, as of June 30, 2021 and December 31, 2020. The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive loss to earnings during the three and six months ended June 30, 2021 and 2020.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://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 http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration