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Derivatives and Net Investment Hedge | 12 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Net Investment Hedge | (8) Derivatives and Net Investment Hedge Foreign Exchange Forward Contracts The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory, over a maximum period of twenty-four 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 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 Company also enters into foreign exchange forward contracts to hedge against certain monetary asset and liability accounts on the consolidated balance sheet 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. The following table summarizes the net notional values of foreign exchange forward contracts outstanding as of December 31, 2024 and December 31, 2023:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |
Derivatives designated as hedging instruments: |  |  |  |  |  |
Foreign exchange forward contracts-cash flow hedges |  | $ | 74 |  |  | $ | 178 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign exchange forward contracts-balance sheet hedges |  | $ | 154 |  |  | $ | 155 |
For both periods presented in the table, the Japanese yen and the South Korean won were the largest notional contracts for designated cash flow hedges. For 2024, the British pound and Chinese yuan were the largest notional contracts for balance sheet hedges not designated as a hedging instrument. For 2023, the Euro and British pound were the largest notional contracts for balance sheet hedges not designated as a hedging instrument. Net Investment Hedge On January 1, 2023, the Company designated certain Euro-denominated debt as a net investment hedge to hedge a portion of its net investments in certain of its entities with functional currencies denominated in the Euro. On January 22, 2024, the Company prepaid its USD Tranche A in full using, in part, a €250 incremental borrowing under its Euro Tranche B, each as defined and further described in Note 15. On January 22, 2024, the Company designated the additional €250 of its Euro Tranche B as a net investment hedge. As of December 31, 2024, the total principal amount outstanding under its Euro Tranche B was €596 and the entire balance was designated as a net investment hedge. As of December 31, 2023, the total principal amount outstanding under its Euro Tranche B was €593 and the entire balance was designated as a net investment hedge. For these net investment hedges, the Company records foreign currency remeasurement gains and losses within a component of OCI. Recognition in earnings of amounts previously recorded in accumulated OCI is limited to circumstances such as complete or substantially complete liquidation or sale of the net investment in the hedged foreign operations. Interest Rate Agreements The Company has various interest rate swap agreements maturing through January 31, 2029, that exchange a one-month forward-looking term rate based on the variable secured overnight financing rate (“Term SOFR”) paid on the outstanding balance of its USD Term Loan Facility, as defined and further described in Note 15, to a fixed rate. The notional value of the agreements was $2,600 and $2,300 as of December 31, 2024 and December 31, 2023, respectively. The Company acquired USD London Interbank Offered Rate (“LIBOR”) interest rate cap agreements as a result of its acquisition of Atotech Limited (“Atotech”) on August 17, 2022 (the “Atotech Acquisition”) and had utilized these agreements to offset Term SOFR on its Term Loan Facility. The notional value of the agreements was $700 as of December 31, 2023 and expired on January 31, 2024. Effective June 30, 2023, the Company’s USD LIBOR based interest rate caps were converted to Term SOFR. The Company also had two USD LIBOR based swaps that were converted to Term SOFR, effective June 30, 2023. The conversions from USD LIBOR to Term SOFR did not have a material impact on the Company’s results of operations. 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, the hedging relationship will be discontinued and changes in the fair value of the hedging instruments from the last assessment period that were effective up to the current period will be recorded immediately in earnings. Amounts previously recorded in OCI will remain in OCI and will be reclassified to earnings when the interest payments impact consolidated earnings. If the Company determines that the interest payments are unlikely to occur, amounts previously recorded in OCI will be reclassified to earnings immediately. Changes in the fair value of interest rate caps were recorded immediately in earnings, as the Company did not designate these instruments as hedges and therefore these instruments did not qualify for hedge accounting. The cash flows resulting from interest rate agreements are classified in cash flows from operating activities. The following table summarizes the net gains (losses) on derivatives designated as cash flow hedging instruments:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Foreign exchange forward contracts-cash flow hedges: |  |  |  |  |  |  |  |  |
Net (losses) gains recognized in OCI, net of tax |  | $ | 6 |  |  | $ | 1 |  |  | $ | (4 | )
Net gains (losses) reclassified from accumulated OCI into cost of revenues |  | $ | 6 |  |  | $ | 7 |  |  | $ | 18 |
Interest rate hedges: |  |  |  |  |  |  |  |  |
Net (losses) gains recognized in OCI, net of tax |  | $ | (7 | ) |  | $ | (25 | ) |  | $ | 54 |
Net gains (losses) reclassified from accumulated OCI into interest expense |  | $ | 61 |  |  | $ | 45 |  |  | $ | 3 |
The Compan y expects a gain of approximately $7 to be reclassified from OCI into cost of revenues during the next twelve months related to foreign exchange forward contracts. The Company expects a gain of approximately $17 to be reclassified from OCI into interest expense during the next twelve months related to interest rate swaps. The following table summarizes the net gains (losses) on derivatives not designated as hedging instruments:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Net (losses) gains recognized in other (income) expense, net |  | $ | (2 | ) |  | $ | (32 | ) |  | $ | (8 | )
The interest rate caps resulted in a reduction of $3, $30 and $5 to interest expense in 2024, 2023 and 2022, respectively. Currency Option Agreements In connection with financing the Atotech Acquisition, the Company issued euro denominated term loan debt. In anticipation of issuing this debt, the Company purchased foreign currency option contracts in 2021 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, in 2022 which is included in other (income) expense, net in the table above. Derivative instruments are subject to master netting arrangements. However, the Company has elected to record these contracts on a gross basis in the consolidated balance sheet. The location and fair value amounts of derivative instruments reported in the consolidated balance sheet is disclosed in Note 7.

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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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