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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | In the normal course of business, we use foreign exchange forward and option contracts to manage foreign currency exchange rate risk. Derivatives may give rise to credit risk from the possible non-performance by counterparties. Credit risk is limited to the fair value of those contracts that are favorable to us. We have limited our credit risk by limi ting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial institutions with which we do business. In addition, all the assets and liabilities related to the foreign exchange derivative contracts set forth in the table below are subject to master netting arrangements, such as the International Swaps and Derivatives Association Master Agreement, with each individual counterparty. These master netting arrangements generally provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination event. We have presented all the assets and liabilities related to the foreign exchange derivative contracts, as applicable, on a gross basis, with no offsets, in our unaudited consolidated statements of financial position. There is no financial collateral (including cash collateral) posted or received by us related to the foreign exchange derivative contracts. The following table provides information on the location and fair values of derivative financial instruments included in our unaudited consolidated statements of financial position as of:
(in millions) |  |  |  | September 30, 2024 |  | December 31, 2023
Designation of Derivatives |  | Location on Statement of Financial Position |  | Assets |  | Liabilities |  | Assets |  | Liabilities
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments |  | Other current assets |  | $ | 20 |  |  | $ | — |  |  | $ | 14 |  |  | $ | — |
|  | Other noncurrent assets |  | 2 |  |  | — |  |  | 5 |  |  | — |
|  | Accrued expenses and other current liabilities |  | — |  |  | 1 |  |  | — |  |  | 5 |
|  | Other noncurrent liabilities |  | — |  |  | 2 |  |  | — |  |  | 1 |
|  | Total |  | 22 |  |  | 3 |  |  | 19 |  |  | 6 |
Foreign exchange forward contracts – Not designated as hedging instruments |  | Other current assets |  | 3 |  |  | — |  |  | 1 |  |  | — |
|  | Accrued expenses and other current liabilities |  | — |  |  | 2 |  |  | — |  |  | 9 |
|  | Total |  | 3 |  |  | 2 |  |  | 1 |  |  | 9 |
Total |  |  |  | $ | 25 |  |  | $ | 5 |  |  | $ | 20 |  |  | $ | 15 |
Cash Flow Hedges We have entered and continue to enter into a series of foreign exchange derivative contracts that are designated as cash flow hedges of Indian rupee denominated payments in India. These contracts are intended to partially offset the impact of movement of the Indian rupee against the U.S. dollar on future operating costs and are scheduled to mature each month during the remainder of 2024, 2025 and the first nine months of 2026. The changes in fair value of these contracts are initially reported in "Accumulated other comprehensive income (loss)" in our unaudited consolidated statements of financial position and are subsequently reclassified to earnings within "Cost of revenues" and "Selling, general and administrative expenses" in our unaudited consolidated statements of operations in the same period that the forecasted Indian rupee denominated payments are recorded in earnings. As of September 30, 2024, we estima te that $14 million, net of tax, of net gains rela ted to derivatives designated as cash flow hedges reported in "Accumulated other comprehensive income (loss)" in our unaudited consolidated statements of financial position is expected to be reclassified into earnings within the next 12 months. The notional value of the outstanding contracts by year of maturity was as follows:
(in millions) | September 30, 2024 |  | December 31, 2023
2024 | 603 |  |  | $ | 1,878 |
2025 | 1,725 |  |  | 1,020 |
2026 | 595 |  |  | — |
Total notional value of contracts outstanding (1) | $ | 2,923 |  |  | $ | 2,898 |
(1)Includes $25 million and $45 million notional value of option contracts as of September 30, 2024 and December 31, 2023, respectively, with the remaining notional value related to forward contracts. The following table provides information on the location and amounts of pre-tax gains and losses on our cash flow hedges for the three months ended September 30:
(in millions) | Change in Derivative Gains and Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion) |  | Location of Net Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) |  | Net Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
| 2024 |  | 2023 |  |  |  | 2024 |  | 2023
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments | $ | (13) |  |  | $ | (24) |  |  | Cost of revenues |  | $ | 5 |  |  | $ | (4) |
|  |  |  |  | SG&A expenses |  | — |  |  | (1) |
|  |  |  |  | Total |  | $ | 5 |  |  | $ | (5) |
The following table provides information on the location and amounts of pre-tax gains and losses on our cash flow hedges for the nine months ended September 30:
(in millions) | Change in Derivative Gains and Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion) |  | Location of Net Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion) |  | Net Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
| 2024 |  | 2023 |  |  |  | 2024 |  | 2023
Foreign exchange forward and option contracts – Designated as cash flow hedging instruments | $ | 15 |  |  | $ | 44 |  |  | Cost of revenues |  | $ | 8 |  |  | $ | (19) |
|  |  |  |  | SG&A expenses |  | 1 |  |  | (3) |
|  |  |  |  | Total |  | $ | 9 |  |  | $ | (22) |
The activity related to the change in net unrealized gains and losses on the cash flow hedges included in "Accumulated other comprehensive income (loss)" in our unaudited consolidated statements of stockholders' equity is present ed in Note 11. Other Derivatives We use foreign exchange forward contracts to provide an economic hedge against balance sheet exposures to certain monetary assets and liabilities denominated in currencies other than the functional currency of our foreign subsidiaries. We entered into foreign exchange forward contracts that are scheduled to mature in the fourth quarter of 2024. Realized gains or losses and changes in the estimated fair value of these derivative financial instruments are recorded in the caption "Foreign currency exchange gains (losses), net" in our unaudited consolidated statements of operations. Additional information related to the outstanding foreign exchange forward contracts not designated as hedging instruments was as follows:
(in millions) | September 30, 2024 |  | December 31, 2023
| Notional |  | Fair Value |  | Notional |  | Fair Value
Contracts outstanding | $ | 1,026 |  |  | $ | 1 |  |  | $ | 1,317 |  |  | $ | (8) |
The following table provides information on the location and amounts of realized and unrealized pre-tax gains and losses on the other derivative financial instruments for the three and nine months ended September 30:
| Location of Net Gains (Losses) on Derivative Instruments |  | Amount of Net Gains (Losses) on Derivative Instruments
|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) |  |  | 2024 |  | 2023 |  | 2024 |  | 2023
Foreign exchange forward contracts – Not designated as hedging instruments | Foreign currency exchange gains (losses), net |  | $ | 14 |  |  | $ | 23 |  |  | $ | 42 |  |  | $ | (1) |
The related cash flow impacts of all the derivative activities are reflected as cash flows from operating activities.

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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://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
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