Derivative Financial Instruments

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives recorded on the Condensed Consolidated Balance Sheets:

The following table is a summary of the fair value of derivatives outstanding at March 31, 2024 and December 31, 2023:


	Fair Value
	March 31, 2024				December 31, 2023
	Assets(a)		Accrued Liabilities		Assets(a)		Accrued Liabilities
Derivatives Designated as Cash Flow Hedges

Interest Rate Swaps	$	28	$	—	$	18	$	—
Natural Gas Hedges	$	—	$	1	$	—	$	1
Total Hedges	$	28	$	1	$	18	$	1
Derivatives Not Designated as Cash Flow Hedges
Currency Contracts	$	1	$	—	$	1	$	1
Total Derivatives	$	29	$	1	$	19	$	2

(a) At March 31, 2024 and December 31, 2023, current assets of $29 million and $19 million, respectively, are recorded in prepaid and other current assets on the Condensed Consolidated Balance Sheets.

Derivatives' Impact on the Condensed Consolidated Statement of Operations:

The following table summarizes the impact of the Company's derivatives on the unaudited Condensed Consolidated Statement of Operations:


	Amount of Pre-Tax Gain (Loss) Recognized in Earnings				Amount of Pre-Tax Gain (Loss) Recognized in Earnings
	Cost of Goods Sold		Other (expense) income, net		Cost of Goods Sold		Other (expense) income, net
	Three Months Ended March 31, 2024				Three Months Ended March 31, 2023

Derivatives Not Designated as Hedging Instruments
Currency Contracts	$	—	$	(6)	$	—	$	(7)
Derivatives Designated as Hedging Instruments
Currency Contracts	$	—	$	—	$	(2)	$	—
Natural Gas Hedges	$	(1)	$	—	$	(1)	$	—
Total Derivatives	$	(1)	$	(6)	$	(3)	$	(7)

Interest Rate Risk

As of March 31, 2024, the Company maintains a total of $950 million of interest rate swaps with the objective in using the interest-rate swap agreements to add stability to interest expense and to manage the Company's 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. Fair value gains or losses on these cash flow hedges are recorded in accumulated other comprehensive loss and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affect earnings.

At March 31, 2024 and December 31, 2023, the net unrealized gain of $28 million and the unrealized gain of $18 million, respectively, was recorded in "Accumulated other comprehensive loss" on the unaudited Condensed Consolidated Balance Sheet. For the three months ended March 31, 2024, the amounts recorded in interest expense related to the interest-rate swap agreements were $8 million, of which $2 million for each period was reclassified from "Accumulated other comprehensive loss" to interest expense. For the three months ended March 31, 2023, the net amounts recorded in interest expense related to the interest-rate swap agreements were $4 million.

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. Historically, we have used a combination of zero-cost collars or forward contracts to reduce the exposure. 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 March 31, 2024, 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 unaudited Condensed Consolidated Balance Sheet, of which $2 million was recognized in earnings during the three months ended March 31, 2023.

From time to time, we enter into foreign currency contracts for the South African Rand, Australian Dollar, Euro, Pound Sterling, and Saudi Riyal to reduce exposure of our subsidiaries’ balance sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency exchange rates. Historically, we have used forward contracts to reduce the exposure. 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 unaudited Condensed Consolidated Statement of Operations and partially offsets the change in value of third party and intercompany-related receivables not denominated in the functional currency of the subsidiary. At March 31, 2024, there was (i) 971 million South African Rand (or approximately $51 million at March 31, 2024 exchange rate), (ii) 138 million Australian dollars (or approximately $90 million at the March 31, 2024 exchange rate), (iii) 48 million Pound Sterling (or approximately $61 million at the March 31, 2024 exchange rate), (iv) 7 million Euro (or approximately $8 million at the March 31, 2024 exchange rate), and (v) 88 million Saudi Riyal (or approximately $23 million at the March 31, 2024 exchange rate) of notional amounts of outstanding foreign currency contracts. At December 31, 2023, there was (i) 837 million South African Rand (or approximately $44 million at the March 31, 2024 exchange rate), (ii) 153 million Australian dollars (or approximately $100 million at the March 31, 2024 exchange rate), (iii) 45 million Pound Sterling (or approximately $57 million at the March 31, 2024 exchange rate), (iv) 45 million Euro (or approximately $49 million at the March 31, 2024 exchange rate) and (v) 67 million Saudi Riyal (or approximately $18 million at the March 31, 2024 exchange rate) of notional amounts of outstanding foreign currency contracts.