v3.26.3
Derivatives and Hedging Activities
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities
16. DERIVATIVES AND HEDGING ACTIVITIES
Cash Flow Hedges
Versigent is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices and changes in interest rates, which may result in cash flow risks. To manage the volatility relating to these exposures, Versigent aggregates the exposures on a consolidated basis to take advantage of natural offsets. For exposures that are not offset within its operations, Versigent enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes, and designation of derivative instruments is performed on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the fair value or cash flows of the underlying exposures being hedged. Versigent assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its documented policy.
As of September 30, 2026, the Company had the following outstanding notional amounts related to commodity and foreign currency forward and option contracts designated as cash flow hedges that were entered into to hedge forecasted exposures:
CommodityQuantity HedgedUnit of MeasureNotional Amount
(Approximate USD Equivalent)
(in thousands)(in millions)
Copper54,026 pounds$355 
Foreign CurrencyQuantity HedgedUnit of MeasureNotional Amount
(Approximate USD Equivalent)
(in millions)
Mexican Peso18,912 MXN$1,051 
Chinese Renminbi1,247 RMB$186 
As of September 30, 2026, Versigent has entered into derivative instruments to hedge cash flows extending out to September 2028.
Gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated OCI, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated OCI will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. Net gains on cash flow hedges included in accumulated OCI as of September 30, 2026 were $89 million (approximately $76 million, net of tax). Of this total, approximately $83 million of gains are expected to be included in cost of sales within the next 12 months and approximately $6 million of gains are expected to be included in cost of sales in subsequent periods. Cash flow hedges are discontinued when Versigent determines it is no longer probable that the originally forecasted transactions will occur. Cash flows from derivatives used to manage commodity and foreign exchange risks designated as cash flow hedges are classified as operating activities within the consolidated statements of cash flows.
Derivatives Not Designated as Hedges
In certain occasions the Company enters into certain foreign currency and commodity contracts that are not designated as hedges. When hedge accounting is not applied to derivative contracts, gains and losses are recorded to other expense, net and cost of sales in the consolidated statements of operations.
Fair Value of Derivative Instruments in the Balance Sheet
The fair value of derivative financial instruments recorded in the consolidated balance sheet as of September 30, 2026 is as follows:
Asset DerivativesLiability DerivativesNet Amounts of Assets and (Liabilities) Presented in the Balance Sheet
Balance Sheet LocationSeptember 30,
2026		Balance Sheet LocationSeptember 30,
2026		September 30,
2026
(in millions)
Derivatives designated as cash flow hedges:
Commodity derivativesOther current assets$46 Accrued liabilities$— $46 
Foreign currency derivatives*Other current assets29 Other current assets4 25 
Commodity derivativesOther long-term assets9 Other long-term liabilities— 9 
Foreign currency derivatives*Other long-term assets1 Other long-term assets— 1 
Foreign currency derivatives*Other long-term liabilities— Other long-term liabilities3 (3)
Total derivatives designated as hedges$85 $7 
Derivatives not designated:
Foreign currency derivatives*Other current assets$1 Other current assets$1 — 
Foreign currency derivatives*Accrued liabilities— Accrued liabilities2 (2)
Total derivatives not designated as hedges$1 $3 
*    Derivative instruments within this category are subject to master netting arrangements and are presented on a net basis in the consolidated balance sheets in accordance with accounting guidance related to the offsetting of amounts related to certain contracts.
The fair value of Versigent’s derivative financial instruments were in a net asset position as of September 30, 2026.
Effect of Derivatives on the Statements of Operations and Statements of Comprehensive Income
The pre-tax effects of derivative financial instruments in the consolidated statements of operations and consolidated statements of comprehensive income for the three and nine months ended September 30, 2026 are as follows:

Three Months Ended September 30, 2026Gain (Loss) Recognized in OCIGain Reclassified from OCI into Income
(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives$24 $19 
Foreign currency derivatives(21)20 
Total$3 $39 
Loss Recognized in Income
(in millions)
Derivatives not designated:
Foreign currency derivatives$(1)
Total$(1)
Nine Months Ended September 30, 2026Gain (Loss) Recognized in OCIGain Reclassified from OCI into Income
(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives$90 $35 
Foreign currency derivatives73 39 
Total$163 $74 
Loss Recognized in Income
(in millions)
Derivatives not designated:
Foreign currency derivatives$(3)
Total$(3)
The gain or loss recognized in income for designated and non-designated derivative instruments was recorded to cost of sales and other expense, net in the consolidated statements of operations for the three and nine months ended September 30, 2026.
Refer to Note 2. Significant Accounting Policies and Note 17. Fair Value of Financial Instruments for additional information.