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Derivative Instruments | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments In the normal course of business, we are exposed to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. We use derivative instruments to manage the volatility related to these exposures. The objective of these derivative instruments is to reduce fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These financial instruments are not used for trading or other speculative purposes. Historically, we have not incurred, and do not expect to incur in the future, any losses as a result of counterparty default. The fair value of our derivative instruments and the related notional amounts were as follows:
|  | September 30, 2024
|  |  |  | Derivative Assets |  | Derivative Liabilities
(In millions) |  | Notional Amount |  | Balance Sheet Caption |  | Fair Value |  | Balance Sheet Caption |  | Fair Value
Derivatives designated as hedges |  |  |  |  |  |  |  |  |  |
Cross-currency swap agreements |  | $ | 249 |  |  | Other current assets |  | $ | — |  |  | Other current liabilities |  | $ | (17) |
Cross-currency swap agreements |  | 403 |  |  | Other long-term assets |  | — |  |  | Other long-term liabilities |  | (22) |
Interest rate swaps |  | 550 |  |  | Other current assets |  | — |  |  | Other current liabilities |  | (1) |
Total |  |  |  |  |  | $ | — |  |  |  |  | $ | (39) |
|  | December 31, 2023
|  |  |  | Derivative Assets |  | Derivative Liabilities
(In millions) |  | Notional Amount |  | Balance Sheet Caption |  | Fair Value |  | Balance Sheet Caption |  | Fair Value
Derivatives designated as hedges |  |  |  |  |  |  |  |  |  |
Cross-currency swap agreements |  | $ | 652 |  |  | Other current assets |  | $ | — |  |  | Other current liabilities |  | $ | (34) |
Interest rate swaps |  | 350 |  |  | Other current assets |  | — |  |  | Other current liabilities |  | (2) |
Interest rate swaps |  | 200 |  |  | Other long-term assets |  | — |  |  | Other long-term liabilities |  | — |
Total |  |  |  |  |  | $ | — |  |  |  |  | $ | (36) |
The derivatives are classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves. The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income was as follows:
|  | Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives |  | Amount of Gain Reclassified from AOCI into Net Income |  | Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
|  | Three Months Ended September 30,
(In millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Derivatives designated as cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | (1) |  |  | $ | (1) |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |
Derivatives designated as net investment hedges |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swap agreements |  | (23) |  |  | 20 |  |  | — |  |  | — |  |  | 2 |  |  | 2 |
Total |  | $ | (24) |  |  | $ | 19 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 2 |
|  | Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives |  | Amount of Gain Reclassified from AOCI into Net Income |  | Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
|  | Nine Months Ended September 30,
(In millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Derivatives designated as cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 1 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |
Derivatives designated as net investment hedges |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swap agreements |  | (5) |  |  | 7 |  |  | — |  |  | — |  |  | 7 |  |  | 6 |
Total |  | $ | (4) |  |  | $ | 8 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 7 |  |  | $ | 6 |
Cross-Currency Swap Agreements We enter into cross-currency swap agreements to manage the foreign currency exchange risk related to our international operations by effectively converting our fixed-rate USD-denominated debt, including the associated interest payments, to fixed-rate, euro (“EUR”)-denominated debt. The risk management objective of these transactions is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows of this debt. During the term of the swap contracts, we receive interest on a quarterly basis from the counterparties based on USD fixed interest rates, and we pay interest, also on a quarterly basis, to the counterparties based on EUR fixed interest rates. At maturity, we will repay the original principal amount in EUR and receive the principal amount in USD. These agreements expire at various dates through 2027. We designated these cross-currency swaps as qualifying hedging instruments and account for them as net investment hedges. We apply the simplified method of assessing the effectiveness of our net investment hedging relationships. Under this method, for each reporting period, the change in the fair value of the cross-currency swaps is initially recognized in Accumulated other comprehensive income (“AOCI”). The change in the fair value due to foreign exchange remains in AOCI and the initial component excluded from effectiveness testing will initially remain in AOCI and then will be reclassified from AOCI to Interest expense each period in a systematic manner. Cash flows related to the periodic exchange of interest payments for these net investment hedges are included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows. Interest Rate Hedging We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”). The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges. The outstanding interest rate swaps mature on various dates in 2024 and 2025. We record gains and losses resulting from fair value adjustments to the designated portion of interest rate swaps in AOCI and reclassify them to Interest expense on the dates that interest payments accrue. Cash flows related to the interest rate swaps are included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

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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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