Derivatives and Hedging Activity |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivatives and Hedging Activity | Derivatives and Hedging Activity We are exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, we enter into various derivative instruments that reduce these risks by creating offsetting exposures. We generally do not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management We are exposed to foreign exchange risk when we earn revenues, pay expenses, or enter into monetary intercompany transfers denominated in a currency that differs from our functional currency, or other transactions that are denominated in a currency other than our functional currency. We use foreign exchange derivatives, typically forward contracts and options, to reduce our overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than three years. During the three-month periods ended September 30, 2026 and 2025, $3 million and $6 million, respectively, related to foreign currency translation were reclassified from accumulated other comprehensive loss to the statement of earnings. During the nine-month periods ended September 30, 2026 and 2025, $9 million and $13 million, respectively, related to foreign currency translation were reclassified from accumulated other comprehensive loss to the statement of earnings. Interest Rate Risk Management We enter into various long-term debt agreements. We use interest rate derivatives, typically swaps, to reduce our exposure to the effects of interest rate fluctuations on the forecasted interest rates for up to three years into the future. We have not received or pledged any collateral related to derivative arrangements at September 30, 2026. During the three-month periods ended September 30, 2026 and 2025, $3 million and $6 million of expense, respectively, related to the fair value of derivative investments, was reclassified from accumulated other comprehensive loss to the statement of earnings. During the nine-month periods ended September 30, 2026 and 2025, $9 million and $14 million of expense, respectively, related to the fair value of derivative investments, was reclassified from accumulated other comprehensive loss to the statement of earnings. During the three-month period ended September 30, 2026, no interest rate contract hedges were settled. During the nine-month period ended September 30, 2026, we settled approximately $11 million of interest rate contract hedges with a notional value of $1,500 million that will be amortized into interest expense in future periods. On September 30, 2026, we had no outstanding interest rate hedges. We estimate that approximately $7 million of pretax gain currently included within accumulated other comprehensive income will be reclassified into earnings in the next twelve months.
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