Derivative Financial Instruments

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

3. Derivative Financial Instruments

The Company uses derivative financial instruments to manage its foreign currency exchange rate risk. Forward currency contracts are executed to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). The Company also executes forward currency contracts to manage the foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts (non-designated hedge).

At December 31, 2023, the Company has determined the fair value of its derivative financial instruments representing assets of $19 million and liabilities of $21 million (currency related derivatives) using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange and interest rates at each financial reporting date. At December 31, 2023, the net fair value of the Company’s foreign currency forward contracts totaled a net liability of $2 million.

Forward currency contracts consist of (in millions):

         
        Currency Denomination

        Currency

        December 31, 2023

        December 31, 2022

Colombian Peso

COP

57,487

COP

—

Norwegian Krone

NOK

2,179

NOK

2,741

Japanese Yen

JPY

1,118

JPY

460

U.S. Dollar

USD

677

USD

655

Brazilian Real

BRL

291

BRL

291

Mexican Peso

MXN

157

MXN

160

Euro

EUR

102

EUR

125

South African Rand

ZAR

25

ZAR

149

Singapore Dollar

SGD

23

SGD

27

British Pound Sterling

GBP

5

GBP

16

Danish Krone

DKK

2

DKK

13

Canadian Dollar

CAD

1

CAD

2

South Korean Won

KRW

—

KRW

65,980

Cash Flow Hedging Strategy

To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company maintains a cash flow hedging program. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is recorded in accumulated other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues” when the hedged transactions are cash flows associated with forecasted revenues). The Company includes time value in hedge relationships.

The Company expects accumulated other comprehensive loss of $3 million will be reclassified into earnings within the next twelve months.

Non-designated Hedging Strategy

The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The gain or loss on the derivative instrument is recognized in earnings in other income (expense), together with the changes in the hedged nonfunctional monetary accounts.

The amount of loss recognized in other expenses, net was $10 million, $18 million and $9 million for the years ended 2023, 2022 and 2021, respectively.

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):


	Fair Values of Derivative Instruments (In millions)
	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
	Balance Sheet	December 31,				Balance Sheet	December 31,
	Location	2023		2022		Location	2023		2022
Derivatives designated as hedging instruments under ASC Topic 815
Foreign exchange contracts	Prepaid and other current assets	$	8	$	3	Accrued liabilities	$	2	$	3
Foreign exchange contracts	Other Assets		—		—	Other Liabilities		1		1
Total derivatives designated as hedging instruments under ASC Topic 815		$	8	$	3		$	3	$	4
Derivatives not designated as hedging instruments under ASC Topic 815
Foreign exchange contracts	Prepaid and other current assets	$	11	$	5	Accrued liabilities	$	17	$	10
Foreign exchange contracts	Other Assets		—		—	Other Liabilities		1		—
Total derivatives not designated as hedging instruments under ASC Topic 815		$	11	$	5		$	18	$	10
Total derivatives		$	19	$	8		$	21	$	14