DERIVATIVES

6 Months Ended

Jun. 30, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

The Company uses foreign currency forward contracts, cross-currency swaps, and interest rate swaps to manage risks associated with foreign currency exchange rates, net investments in foreign operations, and interest rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the condensed consolidated balance sheets at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge under ASC 815, Derivatives and Hedging. Cash flows from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the cash flows from items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.

The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts, cross-currency swaps, and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major global banks and financial institutions as counterparties. The Company does not enter into derivative transactions for trading purposes, and is not party to any derivatives that require collateral to be posted prior to settlement.

Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements do not call for collateral and no cash collateral had been received or pledged related to the underlying derivatives as of June 30, 2026.

The following table presents the fair value of derivative instruments:

	June 30, 2026						December 31, 2025
	Outstanding Gross Notional Amount		Other assets		Other noncurrent liabilities		Outstanding Gross Notional Amount		Other assets		Other noncurrent liabilities
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swaps	$	1,840	$	16	$	—	$	1,840	$	1	$	—
Cross-currency contracts	120		5		—		120		3		—
Foreign currency forward contracts	—		—		—		—		—		—
Fair value hedges:
Cross-currency contracts	689		17		—		689		2		—
Net investment hedges:
Cross-currency contracts	931		26		—		931		10		—
Total derivatives designated as hedging instruments	3,580		64		—		3,580		16		—
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	325		4		(1)		312		1		(5)
Total derivatives	$	3,905	$	68	$	(1)	$	3,892	$	17	$	(5)

The following tables present the after tax effect of derivatives on the condensed consolidated statements of operations:

		Amount of expense (income) recognized in income
Derivatives	Location of expense (income) recognized in the condensed consolidated statements of operations	Three Months Ended June 30,
		2026		2025
Cash flow hedging relationships:
Interest rate swaps	Interest expense, net	$	(1)	$	7
Cross-currency contracts	Investment expense (income) and other, net	(1)		9
Cross-currency contracts	Interest expense, net	(1)		2
Foreign currency forward contracts	Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross-currency contracts	Investment expense (income) and other, net	(6)		44
Cross-currency contracts	Interest expense, net	—		(2)
Net investment hedging relationships:
Cross-currency contracts	Interest expense, net	(2)		3
Not designated as hedging instruments:
Foreign currency forward contracts	Investment expense (income) and other, net	—		—

		Amount of expense (income) recognized in income
Derivatives	Location of expense (income) recognized in the condensed consolidated statements of operations	Six Months Ended June 30,
		2026		2025
Cash flow hedging relationships:
Interest rate swaps	Interest expense, net	$	(1)	$	5
Cross-currency contracts	Investment expense (income) and other, net	(3)		14
Cross-currency contracts	Interest expense, net	(1)		1
Foreign currency forward contracts	Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross-currency contracts	Investment expense (income) and other, net	(16)		61
Cross-currency contracts	Interest expense, net	(1)		(1)
Net investment hedging relationships:
Cross-currency contracts	Interest expense, net	(6)		2
Not designated as hedging instruments:
Foreign currency forward contracts	Investment expense (income) and other, net	—		—

Currency Effects

The expense (income) from derivatives designed to offset foreign currency remeasurement gains and losses, recorded in investment expense (income) and other, net were offset by foreign currency transaction gains and losses resulting in a net loss (gain) of $0 and $(1) for the three months ended June 30, 2026 and 2025, respectively, and $1 and $(1) for the six months ended June 30, 2026 and 2025, respectively.

The following tables present the effect of cash flow and fair value hedge accounting on accumulated other comprehensive income (loss) ("AOCI"):

	Amount of gain (loss) recognized in other comprehensive income				Location of (gain) loss reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income
	Three Months Ended June 30,					Three Months Ended June 30,
Derivatives	2026		2025			2026		2025
Cash flow hedging relationships:
Interest rate swaps	$	6	$	(7)	Interest expense, net	$	—	$	—
Cross-currency contracts	(2)		—		Investment expense (income) and other, net	1		(9)
Forward currency forward contracts	—		—		Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross-currency contracts	(2)		1		Investment expense (income) and other, net	5		(47)
					Interest expense, net	—		—
Net investment hedging relationships:
Cross-currency contracts	(5)		(20)		Interest expense, net	(3)		1

	Amount of gain (loss) recognized in other comprehensive income				Location of (gain) loss reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income
	Six Months Ended June 30,					Six Months Ended June 30,
Derivatives	2026		2025			2026		2025
Cash flow hedging relationships:
Interest rate swaps	$	11	$	(18)	Interest expense, net	$	—	$	—
Cross-currency contracts	(1)		2		Investment expense (income) and other, net	3		(14)
Forward currency forward contracts	—		—		Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross-currency contracts	—		1		Investment expense (income) and other, net	16		(60)
					Interest expense, net	—		(2)
Net investment hedging relationships:
Cross-currency contracts	11		(23)		Interest expense, net	—		—

Cash flow hedges

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Interest rate swaps

The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company uses interest rate swap contracts to separate interest rate risk management from the debt funding decision. The Company elected a method that does not require continuous evaluation of hedge effectiveness.

The Company has an aggregate $720 notional amount interest rate swap ("2026 Interest Rate Swap") and aggregate $400 notional swaps ("2028 Interest Rate Swap"). The 2026 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.59% over the term of the agreement, which matures in October 2026. The

2028 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.41% over the term of the agreements, which mature in January 2028.

During 2024, the Company entered into a $720 notional amount forward starting interest rate swap that exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.13% over the term of the agreement, commencing in October 2026 and maturing in January 2029 ("2029 Interest Rate Swap"). Upon commencement, the 2029 Interest Rate Swap will cover the remainder of the interest payments starting in October 2026 to the maturity of the 2021 Term Loan.

As of June 30, 2026, the Company had $1,840 notional amount outstanding in the 2026 Interest Rate Swap, the 2028 Interest Rate Swap, and the 2029 Interest Rate Swap. The Company has designated these swaps as cash flow hedges of the interest rate risk attributable to forecasted variable interest (SOFR) payments for its SOFR based term loan of $2,152. As of June 30, 2026, the weighted average fixed rate of interest on these swaps was approximately 3.52%. Variations in the assets and liability balances related to the swaps are primarily driven by changes in the applicable forward yield curves related to SOFR.

Cross-currency swaps

The Company enters into cross-currency exchange contracts utilized to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to hedge exposures of certain intercompany loans subject to changes in foreign currency exchange rates. The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.

During 2021, the Company entered into two cross-currency swaps designated as cash flow hedges with gross notional U.S. dollar ("USD") equivalent amounts of $26 and $94 with maturity dates of September 2027 and 2030, respectively.

Foreign currency forward contracts

The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany charges and other payments. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in other comprehensive income until the hedged items affect earnings, at which time the hedge gain or loss is reclassified into current earnings. The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.

Fair value hedges

The Company uses cross-currency swaps designated as fair value hedges to manage exposure from intercompany loans subject to foreign exchange risks. During 2024, an Australian dollars ("AUD") swap with a notional amount of $16 and a maturity date in June 2029 was added to the existing British pounds ("GBP"), Canadian dollars ("CAD"), and Euros ("EUR") swaps, which had a total notional amount of $721 and a maturity date in January 2027. During 2025, the Company partially terminated its CAD swap, resulting in the reclassification of $2 of losses from AOCI to interest expense, net in its consolidated statements of operations. Following the partial termination of the CAD swap, the remaining notional amount outstanding as of June 30, 2026 was $689. Subsequent to June 30, 2026, the Company rolled an existing foreign currency forward into an incremental CAD to USD cross-currency swap with a notional amount of $231 and a maturity date in January 2032.

The Company measures the effectiveness of fair value hedges on a spot-to-spot basis. Accordingly, the spot-to-spot change in the derivative fair values are recorded in the consolidated statements of operations and perfectly offset the spot-to-spot change in the underlying intercompany loans, and as such, these hedges are deemed highly effective. The excluded component of the fair values of these derivatives is reported in AOCI within shareholders’ equity in the consolidated balance sheets. Any cash flows associated with these instruments are included in operating activities in the consolidated statements of cash flows.

Net investment hedges

The Company has net investments in foreign subsidiaries subject to changes in foreign currency exchange rates. During the second quarter of 2025, the Company entered into a $701 notional foreign currency swap designated as a net investment hedge ("2025 net investment hedge") for a portion of the Company’s net investments in Euro-denominated subsidiaries. In 2021, the Company entered into a $230 notional foreign currency swap designated as a net investment hedge ("2021 net investment hedge") for a portion of the Company’s net investments in Euro-denominated subsidiaries. Gains and losses resulting from a change in fair value of the net investment hedges are offset by gains and losses on the underlying foreign

currency exposure and are included in AOCI in the condensed consolidated balance sheets. The Company evaluates the effectiveness of its net investment hedges at inception and on an ongoing basis. If a net investment hedge is no longer expected to be effective, the Company discontinues hedge accounting prospectively.

In 2021, the Company amended the critical terms of the 2021 net investment hedge by extending the maturity date to July 2029 and modifying the USD and EUR coupons. The amended swap was redesignated as a net investment hedge and is recorded at fair value with changes recorded in AOCI. The initial net investment hedge was dedesignated. The fair value previously recognized in AOCI related to interest rate movements of the dedesignated swap is being amortized to interest expense on a straight-line basis through the third quarter of 2029 and is less than $1 annually.

Foreign currency contracts

The Company also utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on confirmed foreign currency transactions, including inventory purchases, intercompany charges, loans, and other payments. These forward contracts are undesignated for hedge accounting purposes. The changes in fair value of these contracts are recorded in investment expense (income) and other, net