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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions, and we principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact revenue, expenses, cash receipts, cash payments, and the value of our stockholders' equity. We enter into derivative financial instruments to protect the value or fix the amount of certain cash flows in terms of the functional currency of the business unit with that exposure and also reduce the volatility in stockholders' equity. Cash Flow Hedges of Foreign Exchange Risk We are exposed to fluctuations in various foreign currencies against our functional currencies. We use foreign currency derivatives, including currency forward agreements, to manage our exposure to fluctuations in the various exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. Certain business units with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. Our principal currency exposures for which we enter into cash flow hedges relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Polish Zloty, and Australian Dollar. We had foreign exchange contracts with purchased notional amounts totaling $193 million and $657 million as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, our most significant foreign currency derivatives included contracts to sell U.S. Dollar and purchase Euro, purchase Swedish Krona and sell Euro, sell British Pound and purchase Euro, sell Canadian Dollar and purchase Euro, sell Canadian Dollar and purchase U.S. Dollar, purchase Polish Zloty and sell Euro, and sell Australian Dollar and purchase Euro. The purchased notional amounts associated with these currency derivatives are $74 million, $53 million, $29 million, $13 million, $11 million, $7 million, and $6 million, respectively. As of December 31, 2024, our most significant foreign currency derivatives included contracts to sell U.S. Dollar and purchase Euro, purchase Swedish Krona and sell Euro, sell British Pound and purchase Euro, sell Canadian Dollar and purchase Euro, sell Canadian Dollar and purchase U.S. Dollar, purchase Polish Zloty and sell Euro, and sell Australian Dollar and purchase Euro. The purchased notional amounts associated with these currency derivatives are $258 million, $169 million, $90 million, $42 million, $40 million, $34 million, and $24 million, respectively. Hedges of Net Investments in Foreign Operations We are exposed to changes in foreign currencies impacting our net investments held in foreign subsidiaries. Cross-Currency Swaps Beginning in 2015, we entered into cross-currency swaps to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. During the second quarter of 2019, third quarter of 2020, and second quarter of 2022 we entered into additional cross-currency swaps. The total notional amount of derivative instruments designated as net investment hedges was $3,160 million and $2,181 million as of September 30, 2025 and December 31, 2024, respectively. In May 2025, we completed a transaction to effectively amend and extend the cross-currency swaps maturing in July 2031. The liability position of the existing cross-currency swaps was blended into a new cross-currency swap agreement with a notional amount of $1,200 million maturing in January 2032. In February 2025, we completed a transaction to effectively amend and extend the cross-currency swaps maturing in January 2028. The liability position of the existing cross-currency swaps was blended into a new cross-currency swap agreement with a notional amount of $509 million maturing in July 2028. The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. Items in the table below reflect changes in "Other comprehensive income (loss)" ("OCI/L") within the Statements of Comprehensive Income:
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
Derivatives in Cash Flow Hedges |  |  |  |  |  |  |
Foreign Exchange Contracts |  |  |  |  |  |  |
Amount of gain recognized in OCI/L | $ | 1 |  |  | $ | 3 |  |  | $ | 31 |  |  | $ | — |
Amount of (gain) loss reclassified from OCI/L into Revenue | (3) |  |  | 1 |  |  | 2 |  |  | 1 |
Amount of (gain) loss reclassified from OCI/L into Cost of revenue | (2) |  |  | 1 |  |  | (4) |  |  | 1 |
Derivatives Net Investment Hedges |  |  |  |  |  |  |
Cross-Currency Swaps |  |  |  |  |  |  |
Amount of gain (loss) recognized in OCI/L | $ | 14 |  |  | $ | (56) |  |  | $ | (341) |  |  | $ | 5 |
Amount of income recognized in Interest expense | 11 |  |  | 7 |  |  | 31 |  |  | 23 |
As of September 30, 2025, $13 million of net gains on cash flow hedges are expected to be reclassified into earnings in the next 12 months. As of September 30, 2025, no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration. The fair values of our derivative assets and liabilities are measured on a recurring basis using Level 2 inputs and are determined through the use of models that consider various assumptions including yield curves, time value and other measurements. The fair values of our derivative contracts currently included in our hedging program were as follows:
(in millions) | September 30, 2025 |  | December 31, 2024
Derivatives designated as hedging instruments |  |  |
Assets |  |  |
Cash Flow Hedges |  |  |
Prepaid and other current assets | $ | 8 |  |  | $ | 3 |
Net Investment Hedges |  |  |
Other non-current assets | $ | — |  |  | $ | 50 |
Liabilities |  |  |
Cash Flow Hedges |  |  |
Accrued and other current liabilities | $ | — |  |  | $ | (15) |
Net Investment Hedges |  |  |
Other non-current accrued liabilities | $ | (317) |  |  | $ | (30) |

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