v3.25.2
Financial Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments
Note 8. Financial Instruments
To manage our exposure to market risks, such as changes in foreign currency exchange rates and variable interest rates, we have entered into various derivative transactions. Derivative cash flows are principally classified in the operating activities section of our condensed consolidated statements of cash flows, consistent with the underlying hedged item. Further, we do not offset derivative assets and liabilities on our condensed consolidated balance sheets. Our outstanding positions are discussed below.
Derivatives Not Designated as Hedges
We may enter into foreign currency exchange forward or option contracts to reduce the effects of fluctuating foreign currency exchange rates. As of June 30, 2025 and December 31, 2024, we had outstanding foreign currency exchange contracts with aggregate notional amounts of $1,011 million and $1,016 million, respectively. The amounts of net gains (losses) on derivative instruments not designated as hedging instruments, recorded in other expense, net were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Foreign exchange forward contracts (1)
$9 $3 $24 $(6)
(1)These amounts were substantially offset in other expense, net by the effect of changing exchange rates on the underlying foreign currency exposures.
Derivatives Designated as Hedges – Net investment hedges
At December 31, 2024, we had a series of cross-currency fixed interest rate swaps to help mitigate the impact of foreign currency fluctuations on our operations in Switzerland with a combined 1,000 million CHF notional amount with tenors in 2026 and 2027. In January 2025, we took advantage of market opportunities to restructure our net investment hedges, paying $10 million to settle these instruments early while also collecting $5 million of accrued interest. We simultaneously entered into new cross-currency fixed interest rate swaps with the same 1,000 million CHF notional amounts and covering the same tenors. These instruments were determined to be, and were designated as, effective economic hedges of net investments in our CHF denominated net assets.
The amounts of (losses) gains on net investment hedges, net of tax, recorded in accumulated other comprehensive loss were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Cross-currency fixed interest rate swaps$(133)$(10)$(157)$52 
During the six months ended June 30, 2025 and 2024, these instruments also generated $22 million and $15 million of interest income, respectively, which was included as a contra interest expense, net of capitalized interest in our condensed consolidated statements of operations.
Derivatives Designated as Hedges – Interest rate swaps
We had outstanding interest rate swaps with aggregate notional amounts of $2,800 million as of both June 30, 2025 and December 31, 2024, which have scheduled maturities in 2026. As of June 30, 2025 and December 31, 2024, we also had forward-starting interest rate swap agreements with a combined notional amount of $850 million, which will become effective on August 1, 2026, and mature in line with the applicable Incremental Term Facility maturities, which range between 2028 and 2031.
The amounts of (losses) gains on interest rate swap contracts, net of tax, recorded in accumulated other comprehensive loss were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Interest rate swaps$(5)$21 $(21)$84 
The amounts of gains reclassified out of accumulated other comprehensive loss and recognized into earnings through interest expense, net of capitalized interest were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Interest rate swaps$11 $30 $24 $61 
Over the next 12 months, we expect to reclassify a loss of $7 million out of accumulated other comprehensive loss and into interest expense, net of capitalized interest related to our interest rate swaps, although the actual amounts reclassified may vary as a result of future changes in market conditions.
As of June 30, 2025, when factoring in the impact from our interest rate swaps, the weighted-average effective interest rate on our outstanding indebtedness was 6.25% (excluding the expected future reclassifications to interest expense, net of capitalized interest related to past interest rate swap settlements).