Derivative Financial Instruments

9 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

To reduce the interest rate risk inherent in the Company’s variable rate debt, the Company utilizes interest rate swap agreements to convert a portion of its variable rate debt into a fixed rate obligation. These interest rate swap agreements are designated as cash flow hedges and fix the LIBOR portion of the Company’s US-dollar denominated variable rate borrowings (Note 9). If an interest rate swap agreement is terminated prior to its maturity, the amount previously recorded in Accumulated other comprehensive income (loss), net is recognized into earnings over the period that the hedged transaction impacts earnings. If the hedging relationship is discontinued because it is probable that the forecasted transaction will not occur according to the original strategy, any related amounts previously recorded in Accumulated other comprehensive income (loss), net are recognized into earnings immediately.

US-dollar interest rate swap derivative arrangements are as follows:

As of September 30, 2011
Notional Value	Effective Date	Expiration Date	Fixed Rate (1)
(In $ millions)
800	April 2, 2007	January 2, 2012	4.92	%
400	January 2, 2008	January 2, 2012	4.33	%
200	April 2, 2009	January 2, 2012	1.92	%
1,100	January 2, 2012	January 2, 2014	1.71	%

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(1) Fixes the LIBOR portion of the Company's US-dollar denominated variable rate borrowings (Note 9).

As of December 31, 2010
Notional Value	Effective Date	Expiration Date	Fixed Rate (1)
(In $ millions)
100	April 2, 2007	January 2, 2011	4.92	%
800	April 2, 2007	January 2, 2012	4.92	%
400	January 2, 2008	January 2, 2012	4.33	%
200	April 2, 2009	January 2, 2012	1.92	%
1,100	January 2, 2012	January 2, 2014	1.71	%

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(1) Fixes the LIBOR portion of the Company's US-dollar denominated variable rate borrowings (Note 9).

Euro interest rate swap derivative arrangements are as follows:

As of December 31, 2010
Notional Value	Effective Date	Expiration Date	Fixed Rate(1)
(In € millions)
150	April 2, 2007	April 2, 2011	4.04	%

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⁽¹⁾  Fixes the EURIBOR portion of the Company's Euro denominated variable rate borrowings (Note 9).

The Company did not enter into a new Euro interest rate swap arrangement upon the expiration of the existing Euro interest rate swap arrangement on April 2, 2011.

The Company held US-dollar variable rate to fixed rate interest rate swaps with a notional value of $1.4 billion that were effective as of May 6, 2011. Upon issuance of the 5.875% Notes and prepayment of the Term B loan facility (Note 9), it became probable that the hedged interest payments associated with $275 million of variable rate debt would not occur. The Company, therefore, dedesignated as cash flow hedges US-dollar interest rate swaps with a notional value of $275 million. Accordingly, a loss of $3 million related to the dedesignated US-dollar interest rate swaps, which was previously included in Accumulated other comprehensive income (loss), net, was reclassified into Interest expense in the unaudited interim consolidated statements of operations during the three months ended June 30, 2011. Future mark-to-market adjustments on these dedesignated interest rate swaps will be recorded in Interest expense through their maturity on January 2, 2012. The interest rate swaps fixed rates are 4.33% for $75 million of notional value and 1.92% for $200 million of notional value.

The Company also enters into foreign currency forwards and swaps to minimize its exposure to foreign currency fluctuations. Through these instruments, the Company mitigates its foreign currency exposure on transactions with third party entities as well as intercompany transactions. The foreign currency forwards and swaps are not designated as hedges under FASB ASC Topic 815, Derivatives and Hedging. Gains and losses on foreign currency forwards and swaps entered into to offset foreign exchange impacts on intercompany balances are classified as Other income (expense), net, in the unaudited interim consolidated statements of operations. Gains and losses on foreign currency forwards and swaps entered into to offset foreign exchange impacts on all other assets and liabilities are classified as Foreign exchange gain (loss), net, in the unaudited interim consolidated statements of operations.

Gross notional values of the foreign currency forwards and swaps are as follows:

	As of September 30, 2011	As of December 31, 2010
	(In $ millions)
Total	1,442	751

Information regarding changes in the fair value of the Company’s derivative arrangements is as follows:

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Gain (Loss) Recognized in Other Comprehensive Income			Gain (Loss) Recognized in Income			Gain (Loss) Recognized in Other Comprehensive Income			Gain (Loss) Recognized in Income
	(In $ millions)
Derivatives designated as cash flow hedging instruments
Interest rate swaps	(9	)	(1)	(15	)	(2)	(26	)	(3)	(45	)	(2)
Derivatives not designated as hedging instruments
Interest rate swaps	—			1		(4)	—			(2	)	(4)
Foreign currency forwards and swaps	—			5		(5)	—			(10	)	(5)
Total	(9	)		(9	)		(26	)		(57	)

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⁽¹⁾  Amount excludes $2 million of gains associated with the Company’s equity method investments’ derivative activity and $2 million of tax expense recognized in Other comprehensive income (loss).

⁽²⁾  Amount represents reclassification from Accumulated other comprehensive income (loss), net and is included in Interest expense in the unaudited interim consolidated statements of operations.

⁽³⁾  Amount excludes $1 million of gains associated with the Company’s equity method investments’ derivative activity and $8 million of tax expense recognized in Other comprehensive income (loss).

⁽⁴⁾  Included in Interest expense in the unaudited interim consolidated statements of operations.

⁽⁵⁾  Included in Foreign exchange gain (loss), net for operating activity or Other income (expense), net for non-operating activity in the unaudited interim consolidated statements of operations.

	Three Months Ended September 30, 2010						Nine Months Ended September 30, 2010
	Gain (Loss) Recognized in Other Comprehensive Income			Gain (Loss) Recognized in Income			Gain (Loss) Recognized in Other Comprehensive Income			Gain (Loss) Recognized in Income
	(In $ millions)
Derivatives designated as cash flow hedging instruments
Interest rate swaps	(17	)	(1)	(16	)	(2)	(40	)	(3)	(51	)	(2)
Derivatives not designated as hedging instruments
Foreign currency forwards and swaps	—			(8	)	(4)	—			30		(4)
Total	(17	)		(24	)		(40	)		(21	)

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⁽¹⁾  Amount excludes $1 million of losses associated with the Company’s equity method investments’ derivative activity.

⁽²⁾  Amount represents reclassification from Accumulated other comprehensive income (loss), net and is classified as Interest expense in the unaudited interim consolidated statements of operations.

⁽³⁾  Amount excludes $6 million of losses associated with the Company's equity method investments' derivative activity and $4 million of tax expense.

⁽⁴⁾  Included in Foreign exchange gain (loss), net for operating activity or Other income (expense), net for non-operating activity in the unaudited interim consolidated statements of operations.

See Note 16 for additional information regarding the fair value of the Company’s derivative arrangements.