DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
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9 Months Ended |
Sep. 30, 2020 |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] |
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| Schedule of Derivative Instruments |
The following table summarizes the Company’s interest rate swaps designated as fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Notional Amount | | | | Hedged Item | | Nature of Swap | | As of September 30,
2020 | | As of December 31,
2019 | | Floating Interest Rate | | 2012 Senior Notes due 2022 | | Pay Floating/Receive Fixed | | $ | 330 | | | $ | 330 | | | 3-month USD LIBOR | 2017 Senior Notes due 2021(1) | | Pay Floating/Receive Fixed | | $ | — | | | $ | 500 | | | 3-month USD LIBOR | | 2017 Senior Notes due 2023 | | Pay Floating/Receive Fixed | | $ | 250 | | | $ | 250 | | | 3-month USD LIBOR | | 2017 Senior Notes due 2028 | | Pay Floating/Receive Fixed | | $ | 500 | | | $ | — | | | 3-month USD LIBOR | 2020 Senior Notes due 2025 (2) | | Pay Floating/Receive Fixed | | $ | 300 | | | $ | — | | | 6-month USD LIBOR | | Total | | | | $ | 1,380 | | | $ | 1,080 | | | |
(1) These interest rates swaps were terminated in conjunction with the repayment of the 2017 Senior Notes due 2021 in the third quarter of 2020. (2) These interest rate swaps were executed in the third quarter of 2020. The following table provides information on the cross-currency swaps designated as net investment hedges under ASC Topic 815: | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2020 | | | Pay | | Receive | Nature of Swap | | Notional Amount | | Weighted Average Interest Rate | | Notional Amount | | Weighted Average Interest Rate | Pay Fixed/Receive Fixed | | € | 1,079 | | | 1.43% | | $ | 1,220 | | | 3.96% | | Pay Floating/Receive Floating | | 959 | | | Based on 3-month EURIBOR | | 1,080 | | | Based on 3-month USD LIBOR | Total | | € | 2,038 | | | | | $ | 2,300 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2019 | | | Pay | | Receive | Nature of Swap | | Notional Amount | | Weighted Average Interest Rate | | Notional Amount | | Weighted Average Interest Rate | Pay Fixed/Receive Fixed | | € | 1,079 | | | 1.43% | | $ | 1,220 | | | 3.96% | Pay Floating/Receive Floating | | 931 | | | Based on 3-month EURIBOR | | 1,080 | | | Based on 3-month USD LIBOR | Total | | € | 2,010 | | | | | $ | 2,300 | | | |
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| Gains and Losses on Derivatives Designated as Hedging Instruments |
The following table summarizes the impact to the statement of operations of the Company’s interest rate swaps designated as fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total amounts of financial statement line item presented in the statements of operations in which the effects of fair value hedges are recorded | | Amount of income/(loss) recognized in the consolidated statements of operations | | Three Months Ended September 30, | | Nine Months Ended
September 30, | | 2020 | | 2019 | | 2020 | | 2019 | | Interest expense, net | | $ | (53) | | | $ | (46) | | | $ | (153) | | | $ | (149) | | | | | | | | | | | | |
Descriptions | | Location on Consolidated Statements of Operations | | | | | | | | | | Net interest settlements and accruals on interest rate swaps | |
Interest expense, net | | $ | 6 | | | $ | 1 | | | $ | 14 | | | $ | 1 | | | Fair value changes on interest rate swaps | | Interest expense, net | | $ | (7) | | | $ | 2 | | | $ | 53 | | | $ | 33 | | | Fair value changes on hedged debt | | Interest expense, net | | $ | 7 | | | $ | (2) | | | $ | (53) | | | $ | (33) | |
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| Summary of Notional Amounts of Outstanding Foreign Exchange Forwards |
The following table summarizes the notional amounts of the Company's outstanding forward contract that was designated as a net investment hedge: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2020 | | December 31, 2019 | | | | Notional amount of net investment hedges | | Sell | | Buy | | Sell | | Buy | | | | Contract to sell EUR for USD | | € | 247 | | | $ | 292 | | | — | | | — | | | |
This forward contract will expire in November 2020. The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards: | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2020 | | December 31, 2019 | Notional amount of currency pair: | Sell | | Buy | | Sell | | Buy | Contracts to sell USD for GBP | $ | 320 | | | £ | 254 | | | $ | 235 | | | £ | 178 | | Contracts to sell USD for Japanese Yen | $ | 10 | | | ¥ | 1,000 | | | $ | 29 | | | ¥ | 3,200 | | Contracts to sell USD for Canadian dollars | $ | 105 | | | C$ | 140 | | | $ | 83 | | | C$ | 110 | | Contracts to sell USD for Singapore dollars | $ | 58 | | | S$ | 79 | | | $ | 41 | | | S$ | 56 | | Contracts to sell USD for Euros | $ | 530 | | | € | 452 | | | $ | 421 | | | € | 378 | | | Contracts to sell Euros for GBP | € | 53 | | | £ | 48 | | | € | 25 | | | £ | 21 | | | Contracts to sell USD for Russian Ruble | $ | 9 | | | ₽ | 670 | | | $ | — | | | ₽ | — | | | Contracts to sell USD for Indian Rupee | $ | 18 | | | ₹ | 1,350 | | | $ | — | | | ₹ | — | |
NOTE: € = Euro, £ = British pound, $ = U.S. dollar, ¥ = Japanese Yen, C$ = Canadian dollar, S$= Singapore dollars, ₽= Russian Ruble, ₹= Indian Rupee
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| Amount of Gain/(Loss) Recognized in AOCI on Derivative Net Investment Hedging Relationships (Effectiveness Portion) |
The following tables provide information on the gains/(losses) on the Company’s net investment and cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships | | Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax | | Amount of Gain/(Loss) Reclassified from AOCL into Income, net of Tax | | Gain/(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) | | Three Months Ended
September 30, | | Three Months Ended
September 30, | | Three Months Ended
September 30, | | | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | FX forward contracts | | $ | 1 | | | $ | 5 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | Cross currency swaps | | (98) | | | 79 | | | — | | | — | | | 10 | | | 15 | | Long-term debt | | (46) | | | 18 | | | — | | | — | | | — | | | — | | Total net investment hedges | | $ | (143) | | | $ | 102 | | | $ | — | | | $ | 1 | | | $ | 10 | | | $ | 15 | | | Derivatives in Cash Flow Hedging Relationships | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate contracts | | (1) | | | — | | | (1) | | | — | | | — | | | — | | | Total cash flow hedges | | $ | (1) | | | $ | — | | | $ | (1) | | | $ | — | | | $ | — | | | $ | — | | | Total | | $ | (144) | | | $ | 102 | | | $ | (1) | | | $ | 1 | | | $ | 10 | | | $ | 15 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships | | Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax | | Amount of Gain/(Loss) Reclassified from AOCL into Income, net of Tax | | Gain/(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) | | Nine Months Ended
September 30, | | Nine Months Ended
September 30, | | Nine Months Ended
September 30, | | | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | FX forward contracts | | $ | 1 | | | $ | 5 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | Cross currency swaps | | (81) | | | 75 | | | — | | | — | | | 40 | | | 37 | | Long-term debt | | (47) | |
| 17 | | | — | | | — | | | — | | | — | | Total net investment hedges | | $ | (127) | | | $ | 97 | | | $ | — | | | $ | 1 | | | $ | 40 | | | $ | 37 | | | Derivatives in Cash Flow Hedging Relationships | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate contracts | | (51) | | | — | | | (2) | | | — | | | — | | | — | | | Total cash flow hedges | | $ | (51) | | | $ | — | | | $ | (2) | | | $ | — | | | $ | — | | | $ | — | | | Total | | $ | (178) | | | $ | 97 | | | $ | (2) | | | $ | 1 | | | $ | 40 | | | $ | 37 | |
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| Components of Accumulated Other Comprehensive Income |
The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCL is as follows:
| | | | | | | | | | | | | Cumulative Gains/(Losses), net of tax | | September 30, 2020 | | December 31, 2019 | Net investment hedges | | | | Cross currency swaps | $ | (40) | | | $ | 41 | | FX forwards | 27 | | | 26 | | Long-term debt | (60) | | | (13) | | Total net investment hedges | $ | (73) | | | $ | 54 | | Cash flow hedges | | | | Interest rate contracts | $ | (51) | | | $ | (2) | | | Cross currency swaps | 2 | | | 2 | | Total cash flow hedges | (49) | | | — | | | Total net (loss) gain in AOCL | $ | (122) | | | $ | 54 | |
The following tables show changes in AOCL by component (net of tax): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | September 30, 2020 | | September 30, 2019 | | Gains/(Losses) | Pension and Other Retirement Benefits | Cash Flow Hedges | Foreign Currency Translation Adjustments | Net Investment Hedges | Total | | Pension and Other Retirement Benefits | Cash Flow Hedges | Foreign Currency Translation Adjustments | Net Investment Hedges | | Total | | Balance June 30, | $ | (84) | | $ | (49) | | $ | (479) | | $ | 70 | | $ | (542) | | | $ | (70) | | $ | — | | $ | (401) | | $ | 25 | | | $ | (446) | | | Other comprehensive income/(loss) before reclassifications | (7) | | — | | 186 | | (143) | | 36 | | | — | | — | | (193) | | 102 | | | (91) | | | Amounts reclassified from AOCL | 2 | | — | | — | | — | | 2 | | | 1 | | — | | — | | (1) | | | — | | | Other comprehensive income/(loss) | (5) | | — | | 186 | | (143) | | 38 | | | 1 | | — | | (193) | | 101 | | | (91) | | | Balance September 30, | $ | (89) | | $ | (49) | | $ | (293) | | $ | (73) | | $ | (504) | | | $ | (69) | | $ | — | | $ | (594) | | $ | 126 | | | $ | (537) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended | | September 30, 2020 | September 30, 2019 | | Gains/(Losses) | Pension and Other Retirement Benefits | Cash Flow Hedges | Foreign Currency Translation Adjustments | Net Investment Hedges | Total | | Pension and Other Retirement Benefits | Cash Flow Hedges | Foreign Currency Translation Adjustments | Net Investment Hedges | Total | | Balance December 31, | $ | (92) | | $ | — | | $ | (401) | | $ | 54 | | $ | (439) | | | $ | (53) | | $ | — | | $ | (406) | | $ | 33 | | $ | (426) | | | Other comprehensive income/(loss) before reclassifications | (1) | | (50) | | 108 | | (127) | | (70) | | | (1) | | — | | (188) | | 97 | | (92) | | | Amounts reclassified from AOCL | 4 | | 1 | | — | | — | | 5 | | | 2 | | — | | — | | (1) | | 1 | | | Adoption of ASU 2018-02 | — | | — | | — | | — | | — | | | (17) | | — | | — | | (3) | | (20) | | | Other comprehensive income/(loss) | 3 | | (49) | | 108 | | (127) | | (65) | | | (16) | | — | | (188) | | 93 | | (111) | | | Balance September 30, | $ | (89) | | $ | (49) | | $ | (293) | | $ | (73) | | $ | (504) | | | $ | (69) | | $ | — | | $ | (594) | | $ | 126 | | $ | (537) | |
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| Gains and Losses Recognized in Consolidated Statement of Operations on Derivatives Not Designated as Hedging instruments |
The following table summarizes the impact to the consolidated statements of operations relating to the net losses on the Company’s derivatives which are not designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivatives not designated as accounting hedges | | Location on Statement of Operations | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | | 2020 | | 2019 | | 2020 | | 2019 | Foreign exchange forwards | | Other non-operating income, net | | $ | 36 | | | $ | (26) | | | $ | 1 | | | $ | (35) | |
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| Fair Value of Derivative Instruments |
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges: | | | | | | | | | | | | | | | | | | | | | | | Derivative and Non-Derivative Instruments | | | Balance Sheet Location | | September 30, 2020 | | December 31, 2019 | Assets: | | | | | | | Derivatives designated as accounting hedges: | | | | | | | Cross-currency swaps designated as net investment hedges | | Other assets | | $ | 9 | | | $ | 56 | | Interest rate swaps designated as fair value hedges | | Other assets | | 63 | | | 27 | | | FX forwards designated as net investment hedges | | Other current assets | | 2 | | | — | | Total derivatives designated as accounting hedges | | | | 74 | | | 83 | | | | | | | | | Derivatives not designated as accounting hedges: | | | | | | | FX forwards on certain assets and liabilities | | Other current assets | | 5 | | | 9 | | Total assets | | | | $ | 79 | | | $ | 92 | | Liabilities: | | | | | | | Derivatives designated as accounting hedges: | | | | | | | Cross-currency swaps designated as net investment hedges | | Other liabilities | | $ | 63 | | | $ | — | | Interest rate swaps designated as fair value hedges | | Other liabilities | | 1 | | | — | | Total derivatives designated as accounting hedges | | | | 64 | | | — | | Non-derivatives designated as accounting hedges: | | | | | | | Long-term debt designated as net investment hedge | | Long-term debt | | 1,465 | | | 1,403 | | Derivatives not designated as accounting hedges: | | | | | | | FX forwards on certain assets and liabilities | | Accounts payable and accrued liabilities | | 5 | | | — | | Total liabilities | | | | $ | 1,534 | | | $ | 1,403 | |
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