The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory, over a maximum period of eighteen months, using foreign exchange forward contracts accounted for as cash-flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the hedge accounting criteria, changes in the derivatives' fair value are not included in current earnings but are included in other comprehensive income ("OCI") in stockholders' equity. These changes in fair value will subsequently be reclassified into earnings, as applicable, when the forecasted transaction occurs. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded in earnings in the period it occurs. The cash flows resulting from foreign exchange forward contracts are classified in the condensed consolidated statements of cash flows as part of cash flows from operating activities. The Company does not enter into derivative instruments for trading or speculative purposes.

The Company also enters into foreign exchange forward contracts to hedge against changes in the balance sheet for certain subsidiaries to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business. These derivatives are not designated as cash flow hedging instruments and gains or losses from these derivatives are recorded immediately in other (income) expense, net.

As of September 30, 2022 and December 31, 2021, the Company had outstanding foreign exchange forward contracts with gross notional values of $711 and $241, respectively. The following tables provide a summary of the primary net hedging positions and corresponding fair values held as of September 30, 2022 and December 31, 2021:


	September 30, 2022
Currency Hedged (Buy/Sell)	Gross Notional Value		Fair Value Asset (Liability)
U.S. dollar/Japanese yen	$	51	$	6
U.S. dollar/South Korean won		105		10
U.S. dollar/euro		13		1
U.S. dollar/U.K. pound sterling		6		1
U.S. dollar/Taiwan dollar		41		3
euro/Chinese renminbi		27		—
U.K. pound sterling/euro		4		—
euro/U.S. dollar		426		(13	)
Japanese yen/U.S. dollar		38		(2	)
Total	$	711	$	6


	December 31, 2021
Currency Hedged (Buy/Sell)	Gross Notional Value		Fair Value Asset
U.S. dollar/Japanese yen	$	60	$	2
U.S. dollar/South Korean won		108		1
U.S. dollar/euro		15		—
U.S. dollar/U.K. pound sterling		11		—
U.S. dollar/Taiwan dollar		47		—
Total	$	241	$	3

The net amount of existing gains as of September 30, 2022 expected to be reclassified from OCI into earnings within the next 12 months is immaterial.

The Company has various interest rate swap agreements that exchange a forward-looking term rate based on the variable secured overnight financing rate ("Term SOFR") paid on the outstanding balance of its New Term Loan Facility, as defined and further described in Note 10, to a fixed rate. The Company acquired USD LIBOR interest rate cap agreements as a result of the Atotech Acquisition and is utilizing these agreements to offset the variable Term SOFR rate on its New Term Loan Facility. The Company's USD LIBOR based swaps and USD LIBOR based interest rate caps will convert to Term SOFR after LIBOR's termination in June 2023 according to the terms of each instrument. The table below summarizes interest rate swaps and interest rate caps outstanding at September 30, 2022 and December 31, 2021:


									September 30, 2022		December 31, 2021
Effective Date	Maturity	Fixed Rate			Notional Amount at Effective Date		Notional Amount at September 30, 2022		Fair Value Asset		Fair Value Asset (Liability)

April 5, 2019	March 31, 2023		2.309	%	$	300	$	200	$	2	$	(5	)
October 26, 2021	February 28, 2025		0.485	%		200		200		17		4
March 31, 2022	February 28, 2025		0.623	%		100		100		22		5
September 30, 2022	September 30, 2026		3.156	%		350		350		9		—
January 2,2024	January 31, 2028		2.841	%		250		—		7		—
September 30, 2022	September 30, 2027		3.198	%		350		350		10		—
January 2, 2024	January 31, 2029		2.986	%		250		—		6		—
September 30, 2022	September 30, 2026		3.358	%		600		600		10		—
						2,400		1,800		83		4

March 31, 2020	January 31, 2024		1.000	%		350		350		16		—
March 31, 2020	January 31, 2024		1.000	%		350		350		16		—
						700		700		32		—
					$	3,100	$	2,500	$	115	$	4

The interest rate swaps are recorded at fair value on the balance sheet and changes in the fair value are recognized in OCI. To the extent these arrangements are no longer effective hedges, any ineffectiveness measured in the hedging relationships is recorded immediately in earnings in the period it occurs. Changes in the fair value of interest rate caps are recorded immediately in earnings, as the Company has not designated these instruments as hedges and therefore these instruments do not qualify for hedge accounting.

In connection with financing the Atotech Acquisition, the Company issued euro denominated term loan debt. In anticipation of entering into these euro denominated loans, in 2021 the Company purchased foreign currency option contracts to fix the conversion of EUR 300 into U.S. dollars. The options settled on January 31, 2022 and the Company recorded a gain of $5, net of premiums, which is included in other (income) expense, net.