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Derivatives and Net Investment Hedge | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Net Investment Hedge | (5) Derivatives and Net Investment Hedge Foreign Exchange Forward Contracts The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory and certain of its foreign subsidiaries’ operating expenses, 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 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 also enters into foreign exchange forward contracts to hedge against certain monetary asset and liability accounts on the condensed 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 expense (income), net. The following table summarizes the net notional values of foreign exchange forward contracts outstanding:
|  | September 30, 2025 |  |  | December 31, 2024 |
Designated as cash flow hedging instruments: |  |  |  |  |  |
Foreign exchange forward contracts - cash flow hedges |  | $ | 21 |  |  | $ | 74 |
Not designated as cash flow hedging instruments: |  |  |  |  |  |
Foreign exchange forward contracts - balance sheet hedges |  | $ | 216 |  |  | $ | 154 |
As of September 30, 2025, the Canadian dollar and South Korean won were the largest notional contracts designated as cash flow hedging instruments. As of December 31, 2024, the Japanese yen and South Korean won were the largest notional contracts designated as cash flow hedging instruments. As of September 30, 2025, the Chinese yuan, British pound and New Taiwan dollar were the largest notional contracts for balance sheet hedges not designated as cash flow hedging instruments. As of December 31, 2024, the Chinese yuan and British pound were the largest notional contracts for balance sheet hedges not designated as cash flow hedging instruments. 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 8. On January 22, 2024, the Company designated the additional €250 of its Euro Tranche B as a net investment hedge. As of September 30, 2025, the total principal amount outstanding under its Euro Tranche B was €589 and the entire balance was designated 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. 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, which are cash-flow hedges, 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 8, to a fixed rate. The notional value of the agreements was $1,900 and $2,600 as of September 30, 2025 and December 31, 2024, respectively. The Company acquired USD London Interbank Offered Rate interest rate cap agreements as a result of its acquisition of Atotech Limited (“Atotech”) on August 17, 2022 (the “Atotech Acquisition”), and utilized these agreements to offset Term SOFR on its Term Loan Facility. The interest rate cap agreements expired on January 31, 2024. 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 were classified in cash flows from operating activities in the condensed consolidated statements of cash flows. The following table summarizes the net (losses) gains on derivatives designated as cash flow hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Foreign exchange forward contracts-cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |
Net (losses) gains recognized in OCI, net of tax |  | $ | — |  |  | $ | (7 | ) |  | $ | (4 | ) |  | $ | 1 |
Net gains (losses) reclassified from accumulated OCI into cost of revenues |  | $ | — |  |  | $ | 3 |  |  | $ | 4 |  |  | $ | 5 |
Interest rate hedges: |  |  |  |  |  |  |  |  |  |  |  |
Net (losses) gains recognized in OCI, net of tax |  | $ | (2 | ) |  | $ | (52 | ) |  | $ | (24 | ) |  | $ | (28 | )
Net gains (losses) reclassified from accumulated OCI into interest expense |  | $ | 5 |  |  | $ | 16 |  |  | $ | 17 |  |  | $ | 49 |
The Company expects an immaterial amount to be reclassified from accumulated OCI into cost of revenues during the next 12 months related to foreign exchange forward contracts. The Company expects a net gain of approximately $4 to be reclassified from accumulated OCI into interest expense during the next 12 months related to interest rate hedges. The following table summarizes the net (losses) gains on derivatives not designated as hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net gains (losses) recognized in other expense (income), net |  | $ | 1 |  |  | $ | 1 |  |  | $ | (4 | ) |  | $ | (2 | )
The interest rate caps resulted in a reduction of $3 to interest expense in the nine months ended September 30, 2024. Derivative instruments are subject to master netting arrangements. However, the Company has elected to record these contracts on a gross basis in the condensed consolidated balance sheet. The location and fair value amounts of derivative instruments reported in the condensed consolidated balance sheet is disclosed in Note 4.

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