Derivative Financial Instruments

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives recorded on the Consolidated Balance Sheet:

The following table is a summary of the fair value of derivatives outstanding at December 31, 2022 and 2021:


	Fair Value
	December 31, 2022				December 31, 2021
	Assets(a)		Accrued Liabilities		Assets(a)		Accrued Liabilities
Derivatives Designated as Cash Flow Hedges
Currency Contracts	$	—	$	—	$	3	$	1
Interest Rate Swaps	$	30	$	—	$	—	$	25
Natural Gas Hedges	$	1	$	2	$	1	$	—
Total Hedges	$	31	$	2	$	4	$	26
Derivatives Not Designated as Cash Flow Hedges
Currency Contracts	$	1	$	—	$	—	$	—
Total Derivatives	$	32	$	2	$	4	$	26

(a) At December 31, 2022 and 2021, current assets of $32 million and $4 million, respectively, are recorded in prepaid and other current assets on the Consolidated Balance Sheet.

Derivatives' Impact on the Consolidated Statement of Income

The following table summarizes the impact of the Company's derivatives on the Consolidated Statement of Income:


	Amount of Pre-Tax Gain (Loss) Recognized in Earnings
	Revenue		Cost of Goods Sold		Other (Expense) Income, net		Revenue		Cost of Goods Sold		Other (Expense) Income, net		Revenue		Cost of Goods Sold		Other (Expense) Income, net
	Year Ended December 31, 2022						Year Ended December 31, 2021						Year Ended December 31, 2020
Derivatives Not Designated as Hedging Instruments
Currency Contracts	$	—	$	—	$	1	$	—	$	—	$	1	$	—	$	—	$	4
Derivatives Designated as Hedging Instruments
Currency Contracts	$	4	$	13	$	—	$	(3)	$	35	$	—	$	(7)	$	3	$	—
Natural Gas	$	—	$	5	$	—	$	—	$	3	$	—	$	—	$	(1)	$	—
Total Derivatives	$	4	$	18	$	1	$	(3)	$	38	$	1	$	(7)	$	2	$	4

Interest Rate Risk

During the second quarter of 2019, we entered into interest-rate swap agreements with an aggregate notional value of $750 million representing a portion of our Term Loan Facility, which effectively converts the variable rate to a fixed rate for that portion of the loan. The agreements expire in September 2024. The Company's objectives in using the interest-rate swap agreements are to add stability to interest expense and to manage its exposure to interest rate movements. These interest rate swaps have been designated as cash flow hedges and involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. There was no impact associated with the New Term Loan Facility as the hedge remained highly effective.

Fair value gains or losses on these cash flow hedges are recorded in other comprehensive (loss) income and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affect earnings. For the year ended December 31, 2022, 2021 and 2020, the amounts recorded in interest expense related to the interest-rate swap agreements were $4 million, $16 million and $10 million, respectively. At December 31, 2022 and December 31, 2021, the net unrealized gain was $30 million and the unrealized loss was $25 million, respectively, and was recorded in "Accumulated other comprehensive loss" on the Consolidated Balance Sheet.

Foreign Currency Risk

From time to time, we enter into foreign currency contracts used to hedge forecasted third party non-functional currency sales for our South African subsidiaries and forecasted non-functional currency cost of goods sold for our Australian subsidiaries. These foreign currency contracts are designated as cash flow hedges. Changes to the fair value of these foreign currency contracts are recorded as a component of other comprehensive (loss) income, if these contracts remain highly effective, and are recognized in net sales or costs of goods sold in the period in which the forecasted transaction affects earnings or are recognized in other (expense) income, net when the transactions are no longer probable of occurring.

As of December 31, 2022, we had no outstanding amounts to reduce the exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates or to reduce the exposure of our South African subsidiaries' third party sales to fluctuations in currency rates. At December 31, 2022, there was an unrealized net loss of $4 million recorded in "Accumulated other comprehensive loss" on the Consolidated Balance Sheet, which is expected to be recognized in earnings over the next twelve months. At December 31, 2021, there was an unrealized net gain of $15 million recorded in "Accumulated other comprehensive loss" on the Consolidated Balance Sheet.

We enter into foreign currency contracts to reduce exposure of our subsidiaries’ balance sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency exchange rates. For accounting purposes, these foreign currency contracts are not considered hedges. The change in fair value associated with these contracts is recorded in “Other (expense) income, net” within the Consolidated Statement of Income and partially offsets the change in value of third party and intercompany-related receivables not denominated in the functional currency of the subsidiary. At December 31, 2022, there was (i) 1.2 billion South African Rand (or approximately $68 million at the December 31, 2022 exchange rate), (ii) 197 million Australian dollars (or approximately $135 million at the December 31, 2022 exchange rate), (iii) 20 million Pound Sterling (or approximately $24 million at the December 31, 2022 exchange rate and (iv) 44 million Euro (or approximately $48 million at the December 31, 2022 exchange rate) of notional amount of outstanding foreign currency contracts.