XML 28 R16.htm IDEA: XBRL DOCUMENT
v3.21.2

Derivatives | 9 Months Ended
--- | ---
Sep. 30, 2021
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivatives | NOTE 8. DERIVATIVES From time to time, the Company enters into derivative transactions to hedge its exposure to fluctuations in interest and foreign currency rates. The Company does not enter into derivative transactions for trading purposes, and is not party to any derivatives that require collateral to be posted prior to settlement. Interest Rate Swaps The Company manages its fixed and floating rate debt mix using interest rate swaps. Interest rate swap contracts are used by the Company to separate interest rate risk management from the debt funding decision. The cash paid and received from the settlement of interest rate swaps is included in interest expense in the unaudited condensed consolidated statement of operations. At September 30, 2021, the Company had a 5-year $720 notional amount interest rate swap which effectively provides a fixed London Interbank Offering Rate (“LIBOR”) at 1.62%. This interest rate swap is designated as a cash flow hedge of the interest rate risk attributable to the Company’s forecasted variable interest payments and has a maturity date of October 2024. Variations in the liability balance are primarily driven by changes in the applicable forward yield curves related to the LIBOR. The fair value of the interest rate swap designated as a hedging instrument was a liability of $22 and $35 as of September 30, 2021 and December 31, 2020, respectively. Cross Currency Swaps Currency exchange contracts utilized to maintain the functional currency value of expected financial transactions denominated in foreign currencies are designated as cash flow hedges. Gains and losses related to changes in the market value of these contracts are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) within shareholders’ equity in the unaudited condensed consolidated balance sheets and reclassified to earnings in the same line item in the unaudited condensed consolidated statements of operations and in the same period as the recognition of the underlying hedged transaction. The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively. During the first quarter of 2021, the Company entered into cross-currency swaps with gross notional U.S. dollar equivalent amount of $120. The fair value of the cross-currency swaps was an asset of $3 as of September 30, 2021. Net Investment Hedge The Company has net investments in foreign subsidiaries subject to changes in foreign currency exchange rates. During the first quarter of 2021, the Company entered into a $230 notional foreign currency swap designated as a net investment hedge for a portion of the Company’s net investments in Euro-denominated subsidiaries. Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and are included in AOCI in the unaudited condensed consolidated balance sheets. During the third quarter of 2021, the Company amended the critical terms of the foreign currency swap by extending the maturity date and modifying the U.S. dollar and Euro coupons. The amended swap was redesignated as a net investment hedge as a result of the amendment, and the initial net investment hedge was dedesignated. The amended swap was redesignated as a net investment hedge and recorded at fair value with changes recorded in AOCI. The amended net investment hedge reduces the Company’s interest expense by approximately $3 annually and reduces its overall effective interest rate by approximately 24 basis points. The fair value of the amended net investment hedge was an asset of $6 as of September 30, 2021. The present value as of the date of designation of the dedesignated swap is recorded in AOCI on the unaudited condensed consolidated balance sheets. The fair value previously recognized in AOCI related to interest rate movements of the dedesignated swap and is being amortized to interest expense on a straight-line basis through the third quarter 2029. The amount amortized from AOCI into interest expense during the three and nine months ended September 30, 2021 was less than $1. As of September 30, 2021, approximately $5 of unrealized pre-tax gains remained in AOCI. Foreign Currency Contracts The Company used foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions. At September 30, 2021, the Company had no foreign currency contracts outstanding that are not designated as hedging instruments for accounting purposes. Fair market value gains or losses on foreign currency contracts not designated as hedging instruments were included in the results of operations and are classified in investment income and other, net in the unaudited condensed consolidated statement of operations. The Company rec ognized income of $0 and $1 in investment income and other, net, during the three and nine months ended September 30, 2021, respectively, and $0 during the three and nine months ended September 30, 2020 related to derivatives not designated as hedging instruments. As of December 31, 2020, foreign currency contracts carried a liability balance of $9 and an asset balance of less than $1.

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