v3.26.1
Financial Instruments
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Financial Instruments
We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative contracts, including interest rate swap agreements, interest rate caps, foreign currency spot, forward and swap contracts and net purchased foreign currency options to manage interest rate and foreign currency exposures. Our primary foreign currency market exposures include the Euro, U.K. Pound Sterling, Japanese Yen, Philippine Peso, Mexican Peso, and Chinese Yuan .The fair market values of all our derivative contracts change with fluctuations in interest rates and/or currency exchange rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.
We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with our derivative instruments because these transactions are executed with a diversified group of major financial institutions. Further, our policy is to deal only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties.
Interest Rate Risk Management
We use interest rate swap and interest rate cap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges or non-designated hedges depending on the nature of the risk being hedged. We had no fair value hedges for the three-year period ended December 31, 2025, 2024, and 2023, respectively.
Cash Flow Hedges
We use interest rate swaps and caps to manage the exposure to variability in the interest rate payments on our finance receivable secured loan borrowings. The interest rate swaps convert the interest paid on certain loans to a fixed amount while the caps limit the maximum amount of interest paid.
During 2024, certain derivatives were de-designated as cash flow hedges. The net fair value of these cash flow hedges, which was not material, was recorded in Accumulated Other Comprehensive Loss and then reclassified to earnings.
In 2024, we entered into two floating-to-fixed interest rate swaps to hedge against interest rate volatility associated with any of our floating rate debt which was primarily under our Term Loan B Credit Agreement (TLB). During the third quarter 2025, the Company voluntarily de-designated certain interest rate swaps with a notional value of $300, which were previously accounted for as cash flow hedges of variable-rate debt. The de-designation was made because the Company may, from time to time, prepay portions of the underlying debt, resulting in forecasted interest payments that are no longer considered highly probable. Following the de-designation, the swaps continue to be carried at fair value on the balance sheet. Changes in fair value are recognized in earnings in interest expense were not material during 2025. Amounts previously recorded in accumulated other comprehensive loss related to the hedged cash flows was immaterial and was reclassified to earnings during the third quarter 2025. During the fourth quarter 2025, a $125 interest rate swap was terminated. Accordingly, the notional value of the remaining swap at December 31, 2025 was $175.
Foreign Exchange Risk Management
We are a global company, and we are exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities: 
•Foreign currency-denominated assets and liabilities, and
•Forecasted purchases, and sales in foreign currency.
At December 31, 2025, we had outstanding forward exchange and purchased option contracts with terms of less than 12 months. At December 31, 2025, approximately 97% of these contracts mature within three months, 1% in three to six months and 2% in six to twelve months.
There have not been any other material changes in our hedging strategy during 2025.
The following is a summary of the primary hedging positions and corresponding fair values as of December 31, 2025:
Year Ended December 31,
20252024
Currencies Hedged (Buy/Sell)Gross Notional
Value
Fair Value
Asset (Liability)(1)
Gross Notional
Value
Fair Value
Asset (Liability)(1)
Euro/U.S. Dollar$1,195 $1 $212 $(1)
U.S. Dollar/Euro289 — 342 3 
Euro/U.K Pound Sterling134 — 337 1 
Chinese Yuan/U.S. Dollar134 — — — 
Mexican Peso/U.S. Dollar121 — — — 
Philippine Peso/U.S Dollar115 — — — 
Japanese Yen/U.S. Dollar100 (3)104 (5)
U.K Pound Sterling/U.S. Dollar67 — — — 
Swiss Franc/U.S. Dollar62 — — — 
U.S Dollar/Canadian Dollar52 — 194 — 
Hong Kong Dollar/ U.S. Dollar51 — — — 
Swiss Franc /Euro30 — 19 — 
Japanese Yen/Euro24 (1)52 (1)
U.K. Pound Sterling/Euro14 — 67 — 
Canadian Dollar/Euro21 — 19 — 
All Other247 — 64 — 
Total Foreign exchange hedging$2,656 $(3)$1,410 $(3)
_____________
(1)Represents the net receivable (payable) amount included in the Consolidated Balance Sheet at December 31, 2025 and 2024.
The change in the gross notional value of our hedging positions since December 31, 2024 resulted from the acquisition of Lexmark.
Foreign Currency Cash Flow Hedges
We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. The amount of ineffectiveness recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges was not material for the three years ended December 31, 2025. The net liability fair value of these contracts was $4 and $1 as of December 31, 2025 and 2024, respectively.
Summary of Derivative Instruments Gains (Losses)
Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains and (losses).
Designated Derivative Instruments Gains (Losses)
The following table provide a summary of gains (losses) on derivative instruments:
 
Derivative (Loss) Gain Recognized in OCI (Effective Portion)(Loss) Gain Reclassified from AOCL to Income (Effective Portion)
Derivatives in Cash Flow
Hedging Relationships		Year Ended December 31,Location of Derivative
(Loss) Gain Reclassified
from AOCL into Income
(Effective Portion)		Year Ended December 31,
202520242023202520242023
Foreign exchange contracts – forwards/options$(11)$(6)$(17)Cost of sales$(4)$(9)$(22)
Interest rate contracts(4)6 (1)Interest expense— (1)4 
Total$(15)$— $(18)$(4)$(10)$(18)
For the three years ended December 31, 2025, 2024 and 2023 no amount of ineffectiveness was recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges. All components of each derivative’s gain or (loss) were included in the assessment of hedge effectiveness.
At December 31, 2025, a net after-tax loss of $4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into Net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.
Credit Support Annex
The Company may enter into derivative contracts with derivative counterparties that contain a provision to post collateral to the counterparties when these contracts are in a net liability position. At December 31 2025, the Company had no collateral posted due to this provision.
Non-Designated Derivative Instruments Gains (Losses)
Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the remeasurement of the underlying foreign currency-denominated asset or liability. The net asset/liability fair value of these contracts was $2 and $(2) as of December 31, 2025 and 2024, respectively.
The following table provides a summary of gains (losses) on non-designated derivative instruments:
 Year Ended December 31,
Derivatives NOT Designated as Hedging InstrumentsLocation of Derivative Gain202520242023
Foreign exchange contracts – forwardsOther expense – Currency gains (losses), net$(8)$24 $26 
For the three years ended December 31, 2025, 2024 and 2023, we recorded net currency losses of $12, $15 and $28, respectively. Net currency gains and losses include the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives, as well as the remeasurement of foreign currency-denominated assets and liabilities and are included in Other expenses, net.