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FINANCIAL INSTRUMENTS AND DERIVATIVES
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
FINANCIAL INSTRUMENTS AND DERIVATIVES FINANCIAL INSTRUMENTS AND DERIVATIVES
Derivative Instruments and Hedging Activities

The Company’s activities expose it to a variety of market risks, which primarily include the risks related to the effects of changes in foreign currency exchange rates and interest rates. These financial exposures are monitored and managed by the Company as part of its overall risk management program. The objective of this risk management program is to reduce the volatility that these market risks may have on the Company’s operating results and cash flows. The Company employs derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies. Additionally, the Company utilizes interest rate swaps to convert fixed rate debt into variable rate debt or vice versa. The Company does not hold derivative instruments for trading or speculative purposes.

The following summarizes the notional amounts of hedges of net investments, fair value hedges, and derivative instruments not designated as hedges for accounting purposes by derivative instrument type at June 30, 2026 and the notional amounts expected to mature during the next 12 months.
(in millions)Aggregate Notional AmountAggregate Notional Amount Maturing within 12 Months
Hedges of Net Investments
Foreign exchange forward contracts
$765 $147 
Cross currency basis swaps1,405 — 
Total derivative instruments designated as hedges of net investments$2,170 $147 
Fair Value Hedges
Interest rate swaps$150 $— 
Total derivative instruments designated as fair value hedges$150 $— 
Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts$980 $980 
Total derivative instruments not designated as hedges$980 $980 

Hedges of Net Investments in Foreign Operations     

The Company has significant investments in foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in foreign currency exchange rates. The Company employs both derivative and non-derivative financial instruments to hedge a portion of these exposures. The derivative instruments consist of foreign exchange forward contracts and cross-currency basis swaps. The non-derivative instruments consist of foreign currency-denominated debt held at the parent company level. Translation gains and losses related to the net assets of the foreign subsidiaries are offset by gains and losses in the aforementioned instruments, which are designated as hedges of net investments, and the intrinsic value changes in these instruments are recorded on AOCI, net of tax effects. The time value component of the derivative instrument’s fair value is amortized on a straight-line basis and recognized in Other (income) expense, net in the Consolidated Statements of Operations over the term of the hedge. Cash flows associated with these instruments are generally presented within investing activities in the Consolidated Statements of Cash Flows. However, cash flows attributable to other-than-insignificant financing elements are presented within financing activities.
The fair value of the foreign currency exchange forward contracts and cross-currency basis swaps is the estimated amount the Company would receive or pay at the reporting date, taking into account the effective interest rates and foreign exchange rates. The effective portion of the change in the value of these derivatives is recorded in AOCI, net of tax effects.
In January 2026, the Company settled Swiss franc foreign exchange forward contracts designated as net investment hedges with an aggregate notional amount of 100 million Swiss francs, resulting in a net cash payment of approximately $7 million. The effective portion of the hedge was recognized in AOCI. The Company subsequently entered into Swiss franc foreign exchange forward contracts with an aggregate notional amount of 200 million Swiss francs that are designated as net investment hedges and mature through October 2029. These contracts include excluded components, primarily forward points, for which gains and losses are recognized in earnings as incurred and presented within the operating activities section of the Consolidated Statement of Cash Flows.

Derivative Instruments Not Designated as Hedges

The Company enters into derivative instruments with the intent to partially mitigate the foreign exchange revaluation risk associated with recorded assets and liabilities that are denominated in a non-functional currency. The Company primarily uses foreign exchange forward contracts to hedge these risks. The gains and losses on these derivative transactions offset the gains and losses generated by the revaluation of the underlying non-functional currency balances and are recorded in Other (income) expense, net in the Consolidated Statements of Operations. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.
Derivative Instrument Activity
The effects of derivative hedging instruments on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss were as follows:
Three Months Ended June 30,
20262025
(in millions)Cost of products soldInterest expense, netOther (income) expense, netCost of products soldInterest expense, netOther (income) expense, net
Total amounts of line items presented in the Statement of Operations in which the effects of cash flow, net investment or fair value hedges are recorded$405 $22 $(12)$446 $24 $1 
(Gain) loss on Hedges of Net Investment
Cross currency basis swaps$— $— $(10)$— $— $(2)
Foreign exchange forward contracts— — (7)— — (6)
(Gain) loss on Fair Value Hedges:
Interest rate swaps$— $2 $— $— $2 $— 
Foreign exchange forward contracts— — — — — — 
(Gain) loss on Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts$— $— $(3)$— $— $13 
Amount of Gain or (Loss) Recognized in AOCIAmount of Gain or (Loss) Reclassified from AOCI into Income
Three Months Ended June 30,Consolidated Statements of Operations LocationThree Months Ended June 30,
(in millions)2026202520262025
Hedges of Net Investments
Cross currency basis swaps$2 $(24)Other expense (income), net$— $— 
Foreign exchange forward contracts5 (91)Other expense (income), net— — 
Six Months Ended
20262025
(in millions)Cost of products soldInterest expense, netOther expense (income), netCost of products soldInterest expense, netOther expense (income), net
Total amounts of line items presented in the Statement of Operations in which the effects of cash flow, net investment or fair value hedges are recorded$858 $46 $(29)$859 $43 $1 
(Gain) loss on Hedges of Net Investment
Cross currency basis swaps$— $— $(21)$— $— $(2)
Foreign exchange forward contracts— — (12)— — (12)
(Gain) loss on Fair Value Hedges:
Interest rate swaps$— $3 $— $— $3 $— 
Foreign exchange forward contracts— — — — — — 
(Gain) loss on Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts$— $— $(5)$— $— $12 

Amount of Gain or (Loss) Recognized in AOCIAmount of Gain or (Loss) Reclassified from AOCI into Income
Six Months EndedConsolidated Statements of Operations LocationSix Months Ended
(in millions)2026202520262025
Hedges of Net Investments
Cross currency basis swaps$4 $(29)Other expense (income), net$— $— 
Foreign exchange forward contracts11 (107)Other expense (income), net— — 
Consolidated Balance Sheets Location of Derivative Fair Values

The fair value and the financial statement presentation of the Company’s derivatives in the Consolidated Balance Sheets were as follows:
June 30, 2026
(in millions)Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsAccrued LiabilitiesOther Noncurrent Liabilities
Designated as Hedges:
Foreign exchange forward contracts$— $5 $7 $20 
Interest rate swaps— — 4 11 
Cross currency basis swaps43 — — 70 
Total$43 $5 $11 $101 
Not Designated as Hedges:
Foreign exchange forward contracts$12 $— $22 $— 
Total$12 $— $22 $— 
December 31, 2025
(in millions)Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsAccrued LiabilitiesOther Noncurrent Liabilities
Designated as Hedges:
Foreign exchange forward contracts$— $— $21 $40 
Interest rate swaps— — 3 11 
Cross currency basis swaps42 — — 73 
Total$42 $— $24 $124 
Not Designated as Hedges:
Foreign exchange forward contracts$8 $— $6 $— 
Total$8 $— $6 $— 

Balance Sheet Offsetting

Substantially all of the Company’s derivative contracts are subject to netting arrangements, whereby the right to offset occurs in the event of default or termination in accordance with the terms of the arrangements with the counterparty. While these contracts contain the enforceable right to offset through netting arrangements with the same counterparty, the Company elects to present them on a gross basis in the Consolidated Balance Sheets.
Offsetting of financial assets and liabilities under netting arrangements at June 30, 2026 was as follows:
Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)Gross Amounts RecognizedGross Amount Offset in the Consolidated Balance SheetsNet Amounts Presented in the Consolidated Balance SheetsFinancial InstrumentsCash Collateral Received/PledgedNet Amount
Assets
Foreign exchange forward contracts$17 $— $17 $(17)$— $— 
Cross currency basis swaps43 — 43 (43)— — 
Total assets$60 $— $60 $(60)$— $— 
Liabilities
Foreign exchange forward contracts$49 $— $49 $(20)$— $29 
Interest rate swaps15 — 15 (3)— 12 
Cross currency basis swaps70 — 70 (37)— 33 
Total liabilities$134 $— $134 $(60)$— $74 

Offsetting of financial assets and liabilities under netting arrangements at December 31, 2025 was as follows:
Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)Gross Amounts RecognizedGross Amounts Offset in the Consolidated Balance SheetsNet Amounts Presented in the Consolidated Balance SheetsFinancial InstrumentsCash Collateral Received/PledgedNet Amount
Assets
Foreign exchange forward contracts$8 $— $8 $(8)$— $— 
Cross currency basis swaps42 — 42 (42)— — 
Total assets$50 $— $50 $(50)$— $— 
Liabilities
Foreign exchange forward contracts$67 $— $67 $(18)$— $49 
Commodity contracts
Interest rate swaps14 — 14 — — 14 
Cross currency basis swaps73 — 73 (32)— 41 
Total liabilities$154 $— $154 $(50)$— $104