v3.26.3
Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions, and we principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact revenue, expenses, cash receipts, cash payments, and the value of our stockholders' equity. We enter into derivative financial instruments to protect the value or fix the amount of certain cash flows in terms of the functional currency of the business unit with that exposure and also reduce the volatility in stockholders' equity.
In addition, we use interest rate swap agreements designated as fair value hedges to manage exposure to changes in benchmark interest rates associated with certain fixed-rate debt obligations.
Cash Flow Hedges of Foreign Exchange Risk
We are exposed to fluctuations in various foreign currencies against our functional currencies. We use foreign currency derivatives, including currency forward agreements, to manage our exposure to fluctuations in the various exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date.
Certain business units with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. Our principal currency exposures for which we enter into cash flow hedges relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Polish Zloty, and Australian Dollar. We had foreign exchange contracts with purchased notional amounts totaling $138 million and $759 million as of September 30, 2026 and December 31, 2025, respectively. The most significant foreign currency derivatives are as follows:
(in millions)Notional Value
Sell CurrencyBuy CurrencySeptember 30,
2026		December 31,
2025
USDEUR$58 $275 
EURSEK36 226 
GBPEUR21 119 
CADEUR8 44 
CADUSD6 37 
EURPLN4 33 
AUDEUR5 25 
$138 $759 
Hedges of Net Investments in Foreign Operations
We are exposed to changes in foreign currencies impacting our net investments held in foreign subsidiaries.
Cross-Currency Swaps
We have foreign currency exposure in the Euro-U.S. Dollar and Chinese Yuan (CNY) -U.S. Dollar exchange rates, due to our net investment in foreign operations. We use cross-currency swaps to partially mitigate the impact of the foreign currency rate changes on the Company’s net investments denominated in such foreign currencies. The Company’s cross-currency swaps are designated as net investment hedges.
The total notional amount of derivative instruments designated as net investment hedges was $4,404 million and $3,171 million as of September 30, 2026 and December 31, 2025, respectively.
Fair Value Hedges of Fixed-Rate Debt
During the quarter ended September 30, 2026, the Company entered into interest rate swap agreements with an aggregate notional amount of $600 million and designated the swaps as fair value hedges of benchmark interest rate risk associated with portions of its fixed-rate senior notes due 2036 and 2046.
The Company uses interest rate swap agreements to manage exposure to changes in the fair value of fixed-rate debt resulting from changes in benchmark interest. Under these arrangements, the Company receives fixed-rate interest payments and makes variable-rate payments based on Secured Overnight Financing Rate ("SOFR"). The
Company accounts for these interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective.
The table below provides information regarding the Company's outstanding interest rate derivatives that were used to hedge changes in fair value attributable to interest rate risk:
(in millions)September 30, 2026December 31, 2025
Carrying amount of hedged debt$565 $— 
Cumulative hedging adjustments, included in carrying amount(28)— 
The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. Items in the table below reflect changes in "Other comprehensive income (loss)" ("OCI/L") within the Statements of Comprehensive Income:
Three Months EndedNine Months Ended
September 30,September 30,
(in millions)2026202520262025
Derivatives in Cash Flow Hedges
Foreign Exchange Contracts
Amount of (loss)/gain recognized in OCI/L$(2)$1 $(14)$31 
Amount of loss/(gain) reclassified from OCI/L into Revenue3 (3)1 2 
Amount of gain reclassified from OCI/L into Cost of revenue(1)(2)(5)(4)
Derivatives in Net Investment Hedges
Cross-Currency Swaps
Amount of (loss)/gain recognized in OCI/L$(42)$14 $43 $(341)
Amount of income recognized in Interest expense15 11 43 31 
As of September 30, 2026, $8 million of net gain on cash flow hedges are expected to be reclassified into earnings in the next 12 months.
As of September 30, 2026, no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration.
The fair values of our derivative assets and liabilities are measured on a recurring basis using Level 2 inputs and     are determined through the use of models that consider various assumptions including yield curves, time value and other measurements.
The fair values of our derivative contracts currently included in our hedging program were as follows:
(in millions)September 30, 2026December 31, 2025
Derivatives designated as hedging instruments
Assets
Cash Flow Hedges
Prepaid and other current assets$— $7 
Net Investment Hedges
Other non-current assets$— $— 
Fair Value Hedges
Long-term debt, net$— $— 
Liabilities
Cash Flow Hedges
Accrued and other current liabilities$(5)$(2)
Net Investment Hedges
Other non-current accrued liabilities$(261)$(317)
Fair Value Hedges
Other non-current accrued liabilities$(28)$—