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Derivatives and Hedging Instruments
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING INSTRUMENTS
13. DERIVATIVES AND HEDGING INSTRUMENTS

The Company is exposed to certain risks arising from both our business operations and economic conditions. We principally manage exposures to a wide variety of business and operational risk through management of core business activities. We manage interest rate risk associated with floating rate-debt by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. The Company has historically used interest rate cap agreements or interest rate swap
contracts (“Interest Rate Derivatives”) to manage differences in the amount, timing and duration of known or expected cash payments related to floating rate-debt agreements.

Further, a portion of our operations and revenue occur outside the United States and, as such, the Company has exposure to approximately 30 functional currencies. Our results can be significantly impacted, both positively and negatively, by changes in foreign currency exchange rates. The Company seeks to mitigate such impact by hedging its foreign currency transaction exposure using foreign currency forward and option contracts. We do not enter into hedges for speculative purposes.

Foreign Currency Exchange Risk We utilize foreign exchange contracts to hedge our exposure of assets and liabilities denominated in non-functional currencies. We recognize the gains and losses on these types of hedges in earnings as exchange rates change.

Historically, our risk management strategy included hedging, on behalf of certain subsidiaries, a portion of our forecasted, non-functional currency denominated cash flows for a period of up to 15 months. If the hedge was designated as a highly effective cash flow hedge, the gains or losses were deferred into accumulated other comprehensive income (“AOCI”). The gains or losses from derivative contracts that were designated as highly effective cash flow hedges related to inventory purchases were recorded in cost of products when the inventory is sold to an unrelated third party. Otherwise, they were recorded in earnings when the exchange rates change. As of September 30, 2024 and December 31, 2023, the balance in AOCI related to foreign exchange derivative transactions was zero.

The accounting guidance for derivatives and hedging requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets. The Company designates foreign exchange contracts as cash flow hedges of forecasted transactions when they are determined to be highly effective at inception.

Interest Rate Risk We historically utilized interest rate swap contracts or interest rate cap agreements to add stability to interest cost and to manage exposure to interest rate movements as part of our interest rate risk management strategy.

The Company designates Interest Rate Derivative contracts as cash flow hedges of forecasted transactions when they are determined to be highly effective at inception. Payments and receipts related to Interest Rate Derivatives are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.
The following tables provide information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets:
Fair Values of Derivative Instruments
September 30, 2024
In millions
Balance Sheet
Location
Notional
Amount		Fair
Value
Balance Sheet
Location
Notional
Amount		Fair
Value
Derivatives not designated as hedging instruments
Foreign exchange contractsPrepaid and other current assets$— Other current liabilities$— 
Total foreign exchange contracts$— $— $38 $— 
Total derivatives not designated as hedging instruments$— $— 
 Fair Values of Derivative Instruments
 December 31, 2023
In millions
Balance Sheet
Location
Notional
Amount		Fair
Value
Balance Sheet
Location
Notional
Amount		Fair
Value
Derivatives not designated as hedging instruments
Foreign exchange contractsPrepaid and other current assets$5 Other current liabilities$(4)
Total foreign exchange contracts$402 $5 $207 $(4)
Total derivatives not designated as hedging instruments$5 $(4)
    
The effects of derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 were as follows:
In millionsAmount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative Contracts Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
Derivatives in Cash Flow Hedging RelationshipsFor the three months ended September 30, 2024For the three months ended September 30, 2023Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of OperationsFor the three months ended September 30, 2024For the three months ended September 30, 2023
Interest rate contracts$— $— Cost of services$— $(100)
Interest rate contracts$— $— Interest expense$— $(22)
In millionsAmount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on DerivativeAmount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
Derivatives in Cash Flow Hedging RelationshipsFor the nine months ended September 30, 2024For the nine months ended September 30, 2023Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of OperationsFor the nine months ended September 30, 2024For the nine months ended September 30, 2023
Interest rate contracts$— $24 Cost of services$— $(134)
Interest rate contracts$— $— Interest expense$— $(31)

 Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
In millionsThree months ended September 30Nine months ended September 30
Derivatives not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations2024202320242023
Foreign exchange contractsOther income (expense), net$(2)$(3)$(8)$(8)
Interest rate contracts Cost of services $— $14 $— $14 
The following tables show the impact of the Company’s cash flow hedge accounting relationships on the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2024 and 2023.
Location and Amount of (Gain) Loss Recognized in Income on Cash Flow Hedging Relationships for the three months ended September 30:
In millionsCost of ServicesInterest Expense
2024202320242023
Total amount of expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded$360 $361 $40 $83 
Amount of (gain) loss reclassified from Accumulated other comprehensive loss, net of expense$— $(100)$— $(22)
Location and Amount of (Gain) Loss Recognized in Income on Cash Flow Hedging Relationships for the nine months ended September 30:
In millionsCost of ServicesInterest Expense
2024202320242023
Total amount of expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded$1,120 $1,053 $120 $257 
Amount of (gain) loss reclassified from Accumulated other comprehensive loss, net of expense$— $(134)$— $(31)
Refer to Note 14, “Fair Value of Assets and Liabilities”, for further information on derivative assets and liabilities recorded at fair value on a recurring basis.
Concentration of Credit Risk
The Company is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the Condensed Consolidated Balance Sheets. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions as counterparties to hedging transactions and monitoring procedures. The Company’s business often involves large transactions with customers, and if one or more of those customers were to default on its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for potential losses are adequate. As of September 30, 2024 and December 31, 2023, we did not have any major concentration of credit risk related to financial instruments.