v3.26.3
Derivative Instruments
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
Disclosures about Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes, including derivatives designated as cash flow hedges and derivatives designated as net investment hedges. We use derivatives to manage our exposure to fluctuations in interest rates and currency exchange rates.
Interest Rate Swaps
At September 30, 2026, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan A & B facilities (the “Term Loan A” and together with the “Term Loan B,” the “Term Loan Facilities”), including any subsequent refinancing or replacement of the Term Loan Facilities, beginning August 31, 2021 through the termination date of October 31, 2028. At inception, all of these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI, net of tax, and reclassified into interest expense during the period in which the hedged forecasted transaction affects earnings.
At September 30, 2026, the net amount of pre-tax gains that we expect to be reclassified from AOCI into interest expense within the next 12 months is $115 million.
Cross-Currency Rate Swaps
To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At September 30, 2026, we had outstanding cross-currency rate swap contracts between the Canadian dollar and U.S. dollar and the euro and U.S. dollar that have been designated as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates is economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations.
At September 30, 2026, we had outstanding cross-currency rate swaps from which we receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $5,700 million to partially hedge the net investment in our Canadian subsidiaries (the “CAD cross-currency swaps”), of which $1,450 million have a maturity of September 30, 2028, $1,450 million have a maturity of October 31, 2029, $1,400 million have a maturity of October 31, 2030, and $1,400 million have a maturity of October 31, 2031. At inception, these cross-currency rate swaps were designated as net investment hedges for hedge accounting.
In September 2026, we de-designated, restructured, and re-designated all of our $5,700 million CAD cross-currency swaps. The balances in AOCI associated with the de-designated cross-currency rate swaps will remain in AOCI and will only be reclassified into earnings upon the complete or substantially complete liquidation of our investment in the underlying foreign operations.
At September 30, 2026, we had outstanding cross-currency rate swap contracts designated as hedges between the euro and U.S. dollar from which we receive quarterly fixed-rate interest payments on the U.S. dollar aggregate amount of $2,750 million, of which $150 million have a maturity date of October 31, 2028, $1,200 million have a maturity date of November 30, 2028, and $1,400 million have a maturity date of October 31, 2029. At inception, these cross-currency rate swaps were designated as net investment hedges for hedge accounting.
In June 2026, we de-designated, restructured, and re-designated $1,400 million of euro and U.S. dollar cross-currency swaps. The balances in AOCI associated with the de-designated cross-currency rate swaps will remain in AOCI and will only be reclassified into earnings upon the complete or substantially complete liquidation of our investment in the underlying foreign operations.
In connection with the cross-currency rate swaps hedging Canadian dollar and euro net investments, we utilize the spot method to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in our condensed consolidated statements of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the applicable foreign subsidiaries are sold or substantially liquidated.
Foreign Currency Exchange Contracts
We use foreign exchange derivative instruments to manage the impact of foreign exchange fluctuations on U.S. dollar purchases and payments, such as coffee purchases made by our Canadian Tim Hortons’ operations. At September 30, 2026, we had outstanding forward currency contracts to manage this risk in which we sell Canadian dollars and buy U.S. dollars with a notional value of $207 million with maturities to November 15, 2027. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.
Credit Risk
By entering into derivative contracts, we are exposed to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to us, which creates credit risk for us. We attempt to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring our market position with each counterparty.
Credit-Risk Related Contingent Features
Our derivative instruments do not contain any credit-risk related contingent features.
Quantitative Disclosures about Derivative Instruments and Fair Value Measurements
The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions):
Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Derivatives designated as cash flow hedges(1)
Interest rate swaps$47 $4 $106 $(54)
Forward-currency contracts$— $(6)$9 $(4)
Derivatives designated as net investment hedges
Cross-currency rate swaps$(5)$116 $136 $(367)
(1) We did not exclude any components from the cash flow hedge relationships presented in this table.
Location of Gain or (Loss) Reclassified from AOCI into EarningsGain or (Loss) Reclassified from
AOCI into Earnings
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Derivatives designated as cash flow hedges
Interest rate swapsInterest expense, net$20 $26 $59 $79 
Forward-currency contractsSupply chain cost of sales$2 $— $1 $4 
Location of Gain or (Loss) Recognized in EarningsGain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
Derivatives designated as net investment hedges
Cross-currency rate swapsInterest expense, net$21 $23 $65 $67 
Fair Value as of
September 30,
2026		December 31, 2025Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate$134 $58 Other assets, net
Interest rate— 8 Prepaids and other current assets
Foreign currency5 — Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency39 — Other assets, net
Derivatives not designated as hedging instruments(1)
Foreign currency11 — 
Other assets, net
Total assets at fair value$189 $66 
Liabilities:
Derivatives designated as cash flow hedges
Foreign currency$— $3 Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency160 290 Other liabilities, net
Derivatives not designated as hedging instruments(1)
Foreign currency11 — 
Other liabilities, net
Total liabilities at fair value$171 $293 
(1) These amounts pertain to $800 million of CAD cross-currency rate swaps and $800 million of offsetting swaps both with a maturity date of September 30, 2028. The offsetting changes in fair value of these swaps are recognized in earnings.