v3.26.1
Financial Instruments
 6 Months Ended
Jun. 30, 2026
Investments, All Other Investments [Abstract]  
Financial Instruments FINANCIAL INSTRUMENTS
Fair Value
Accounting guidance on fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:
•Level 1 — Quoted prices for identical instruments in active markets.
•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
•Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company also considers counterparty credit risk in its assessment of fair value. The Company determines the fair value of structured liabilities (where performance is linked to structured interest rates, inflation or currency risks) using the Secured Overnight Financing Rate (“Term SOFR”) swap curve and forward interest and exchange rates at period end. Such instruments are classified as Level 2 based on the observability of significant inputs to the model. Instruments classified as Level 3 include the receivable for earnout as discussed in Note 13, as well as instruments held in pension asset trusts as discussed in Note 8 of the Company’s 2025 Form 10-K. These valuations take into consideration the Company’s credit risk and its counterparties’ credit risk.
The carrying values and the estimated fair values of financial instruments at June 30, 2026 and December 31, 2025 consisted of the following:
June 30, 2026December 31, 2025
(DOLLARS IN MILLIONS)Carrying ValueFair ValueCarrying ValueFair Value
LEVEL 1
Cash and cash equivalents(1)
$569 $569 $590 $590 
LEVEL 2
Credit facilities and bank overdrafts(2)
— — 2 2 
Derivatives
Derivative assets(3)
13 13 18 18 
Derivative liabilities(3)
254 254 241 241 
Commercial paper(2)
50 50 314 314 
Long-term debt:
2026 Euro Notes(4)
914 912 940 935 
2027 Notes(4)
803 773 804 768 
2028 Notes(4)
399 399 399 403 
2030 Notes(4)
1,238 1,111 1,238 1,113 
2040 Notes(4)
341 252 341 255 
2047 Notes(4)
392 324 392 322 
2048 Notes(4)
674 604 674 607 
2050 Notes(4)
888 591 888 585 
_______________________
(1)The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.
(2)The carrying amount approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments.
(3)The carrying amount approximates fair value as the instruments are marked-to-market and held at fair value on the Consolidated Balance Sheets.
(4)The fair value of the Note is obtained from pricing services engaged by the Company, and the Company receives one price for each security. The fair value provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. The inputs to the valuation techniques applied by the pricing services are typically benchmark yields, benchmark security prices, credit spreads, reported trades and broker-dealer quotes, all with reasonable levels of transparency.
Derivatives
Foreign Currency Forward Contracts
The Company periodically enters into foreign currency forward contracts with the objective of managing its exchange rate risk related to foreign currency denominated monetary assets and liabilities of its operations. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions.
Hedges Related to Issuances of Debt
As of June 30, 2026, the Company had no debt instruments designated as net investment hedges. During the second quarter of 2026, the Company de-designated its Euro Notes as a hedge of a portion of its net European investments. Subsequent changes in the fair value of the debt are recorded in earnings. Amounts previously recorded in accumulated other comprehensive income (“AOCI”) related to the hedge remain in AOCI until the related net investment is substantially liquidated. The Company entered into additional foreign currency forward contracts to hedge the remaining currency fluctuations on the Euro Notes until maturity in September 2026.
Cross Currency Swaps
The Company has twenty-two EUR/USD cross currency swaps with a notional value of $2.4 billion that mature through February 2036. The swaps all qualified as net investment hedges in order to mitigate a portion of the Company’s net European investments from foreign currency risk. As of June 30, 2026, the swaps were in a net liability position with an aggregate fair value of $194 million, of which $11 million were in an asset position presented in “Other assets” and $205 million were in a liability position presented in “Other liabilities” on the Consolidated Balance Sheets. Changes in fair value related to cross currency swaps are recorded in OCI.
The following table shows the notional amount of the Company’s derivative instruments outstanding as of June 30, 2026 and December 31, 2025:
(DOLLARS IN MILLIONS)June 30, 2026December 31, 2025
Foreign currency contracts(1)
$(2,965)$(1,840)
Cross currency swaps2,400 1,900 
_______________________
(1)Foreign currency contracts are presented net of the outstanding buy/(sell) instruments.
The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025:
June 30, 2026
(DOLLARS IN MILLIONS)Fair Value of
Derivatives
Designated as
Hedging
Instruments		Fair Value of
Derivatives Not
Designated as
Hedging
Instruments		Total Fair Value
Derivative assets(1)
Foreign currency forward contracts$— $2 $2 
Cross currency swaps11 — 11 
Total derivative assets$11 $2 $13 
Derivative liabilities(2)
Foreign currency forward contracts$— $49 $49 
Cross currency swaps205 — 205 
Total derivative liabilities$205 $49 $254 
December 31, 2025
(DOLLARS IN MILLIONS)Fair Value of
Derivatives
Designated as
Hedging
Instruments		Fair Value of
Derivatives Not
Designated as
Hedging
Instruments		Total Fair Value
Derivative assets(1)
Foreign currency forward contracts$— $17 $17 
Cross currency swaps1 — 1 
Total derivative assets$1 $17 $18 
Derivative liabilities(2)
Foreign currency forward contracts$— $3 $3 
Cross currency swaps238 — 238 
Total derivative liabilities$238 $3 $241 
 _______________________
(1)Derivative assets are recorded to Prepaid expenses and other current assets on the Consolidated Balance Sheets.
(2)Derivative liabilities are recorded to Other current liabilities and Other liabilities on the Consolidated Balance Sheets.
The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2026 and 2025:
Amount of Gain (Loss)
Recognized in Income on
Derivative Settlements		Amount of Gain (Loss) Recognized in Income on Changes in Fair ValueLocation of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS)Three Months Ended June 30,Three Months Ended June 30,
2026202520262025
Foreign currency forward contracts(1)
$(9)$93 $(34)$36 Other expense, net
Amount of Gain (Loss)
Recognized in Income on
Derivative Settlements		Amount of Gain (Loss) Recognized in Income on Changes in Fair ValueLocation of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS)Six Months Ended June 30,Six Months Ended June 30,
2026202520262025
Foreign currency forward contracts(1)
$(19)$115 $(61)$66 Other expense, net
_______________________
(1)The foreign currency contract net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods.

The following table shows the effect of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedging instruments, net of tax, on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2026 and 2025:

Amount of Gain (Loss)
Recognized in OCI on
Derivative and Non-Derivative (Effective
Portion)		Location of Gain (Loss)
Reclassified from Accumulated Other Comprehensive Income (“AOCI”) into Income (Effective Portion)		Amount of Gain (Loss)
Reclassified from
AOCI into
Income (Effective
Portion)
Three Months Ended June 30,Three Months Ended June 30,
(DOLLARS IN MILLIONS)2026202520262025
Derivatives in Cash Flow Hedging Relationships:
Commodity contracts$(1)$— Income (loss) from Discontinued Operations$— $1 
Interest rate swaps(1)
— — Interest expense— (1)
Derivatives in Net Investment Hedging Relationships:
Cross currency swaps(8)(132)N/A— — 
Non-Derivatives in Net Investment Hedging Relationships:
2026 Euro Notes(8)(78)N/A— — 
Tax benefit4 49 — — 
Total$(13)$(161)$— $— 
Amount of Gain (Loss)
Recognized in OCI on
Derivative and Non-Derivative (Effective
Portion)		Location of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion)		Amount of Gain (Loss)
Reclassified from
AOCI into
Income (Effective
Portion)
Six Months Ended June 30,Six Months Ended June 30,
 (DOLLARS IN MILLIONS)2026202520262025
Derivatives in Cash Flow Hedging Relationships:
Commodity contracts$3 $(1)Income (loss) from Discontinued Operations$— $1 
Interest rate swaps(1)
— — Interest expense— (1)
Derivatives in Net Investment Hedging Relationships:
Cross currency swaps43 (164)N/A— — 
Non-Derivatives in Net Investment Hedging Relationships:
2026 Euro Notes8 (115)N/A— — 
Tax (expense) benefit(12)66 — — 
Total$42 $(214)$— $— 
_______________________
(1)     Interest rate swaps were entered into as pre-issuance hedges for the Company’s bond offerings.
The ineffective portion of the above noted net investment hedges was approximately $6 million and $3 million for the three months ended June 30, 2026 and 2025, respectively, and $11 million and $7 million for the six months ended June 30, 2026 and 2025, respectively, and was recorded as a reduction to Interest expense on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
At June 30, 2026, based on current market rates, the Company does not expect any material derivative losses (net of tax), included in AOCI, to be reclassified into earnings within the next 12 months.