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Derivatives
12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
    Foreign Exchange Risk Management

    The Company transacts business in more than 100 countries and is subject to risks associated with fluctuating foreign exchange rates. Accordingly, the Company enters into foreign currency forward contracts to (i) hedge certain forecasted foreign exchange cash flows arising from service contracts (“Service Contract Hedging”) and (ii) hedge non-United States dollar anticipated intercompany reseller fees (“Reseller Hedging”). It is the Company’s policy to enter into foreign currency transactions only to the extent necessary to reduce earnings and cash flow volatility associated with foreign exchange rate movements. The Company does not enter into foreign currency transactions for investment or speculative purposes. The principal currencies hedged in 2020 were the British Pound and the Japanese Yen.

    Service Contract Hedging and Reseller Hedging contracts are designated as cash flow hedges and are carried at fair value, with changes in the fair value recorded to AOCI. The change in fair value is reclassified from AOCI to earnings in the period in which the hedged transaction occurs. These contracts have various expiration dates through September 2021.

    As of December 31, 2020 and 2019, the Company had open Service Contract Hedging and Reseller Hedging contracts to hedge certain forecasted foreign currency cash flow transactions occurring in 2021 and 2020 with notional amounts totaling $70 million and $148 million, respectively. For accounting purposes these hedges are considered highly effective. As of December 31, 2020 and 2019, the Company had recorded gross unrealized gains (losses) of $5 million and $— million and $4 million and less than $(1) million, respectively, related to these contracts. Upon expiration of the hedge instruments in 2020, the Company reclassified the unrealized holding gains and losses on the derivative instruments included in AOCI into earnings. The unrealized gains (losses) are included in other current assets and liabilities on the accompanying consolidated balance sheets as of December 31, 2020 and 2019.

    Interest Rate Risk Management

    The Company has entered into interest rate swap agreements for purposes of managing its exposure to interest rate fluctuations.

    In April 2014, IMS Health entered into United States dollar and Euro denominated interest rate swap agreements (“2014 Swaps”) to hedge interest rate exposure on notional amounts of approximately $600 million of its borrowings. The 2014 Swaps commenced between April and June 2014 and expire at various times through March 2021. As of December 31, 2020, only one of the 2014 Swaps remain unexpired, with a notional value of $356 million. On this agreement, the Company pays a fixed rate of 1.6% and receives a variable rate of interest equal to the greater of three-month Euro Interbank Offered Rate (“EURIBOR”) or the equivalent to LIBOR, and 1%. During 2017, the 2014 Swaps ceased to be considered highly effective for accounting purposes and as such, the Company discontinued hedge accounting and prospective changes in the fair value of the Swaps are recognized in earnings.

    On June 3, 2015, the Company entered into seven forward starting interest rate swaps (“2015 Swaps”) in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below). Interest on the swaps began accruing on June 30, 2016, and the interest rate swaps expired at various times through March 2020. As of December 31, 2020, none
of the 2015 Swaps were still outstanding. The Company paid a fixed rate of 2.1% and received a variable rate of interest equal to the three-month LIBOR on these agreements.

    On July 19, 2018, the Company entered into two forward starting interest rate swaps (“2018 Swaps”) with a total notional value of $500 million in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below). Interest on the 2018 Swaps began accruing on June 28, 2019 and the interest rate swaps expire on June 28, 2024. The Company pays a fixed rate of 3.0% and receives a variable rate of interest equal to the three-month LIBOR on the 2018 Swaps.

On March 27, 2020, the Company entered into an interest rate swap with a notional value of $1 billion in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below). Interest on the swap began accruing on March 31, 2020 and the swap expires on March 31, 2023. The Company pays a fixed rate of .56% and receives a variable rate of interest equal to the one-month LIBOR on the swap.

On June 4, 2020, the Company entered into an interest rate swap with a notional value of $300 million in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below). Interest on the swap began accruing on June 30, 2020 and the swap expires on June 28, 2024. The Company pays a fixed rate of .54% and receives a variable rate of interest equal to the three-month LIBOR on the swap.

The critical terms of the swaps are substantially the same as the underlying borrowings. These interest rate swaps are accounted for as cash flow hedges as these transactions were executed to hedge the Company's interest payments and for accounting purposes are considered highly effective. As such, the effective portion of the hedges is recorded as unrealized gains (losses) on derivatives included in AOCI.

    The fair value of these interest rate swaps represents the present value of the anticipated net payments the Company will make to the counterparty, which, when they occur, are reflected as interest expense on the consolidated statements of income. These interest rate swaps will result in a total debt mix of approximately 66% fixed rate debt and 34% variable rate debt.

    Net Investment Risk Management

    The Company designates its foreign currency denominated debt as a hedge of its net investment in certain foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in the Euro exchange rate with respect to the United States dollar, which is accounted for as a cash flow hedge. As of December 31, 2020, these borrowings (net of original issue discount) were €5,323 million ($6,528 million). The effective portion of foreign exchange gains or losses on the remeasurement of the debt is recognized in the cumulative translation adjustment component of AOCI with the related offset in long-term debt. Those amounts would be reclassified from AOCI to earnings upon the sale or substantial liquidation of these net investments. The amount of foreign exchange losses related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the year ended December 31, 2020 was $561 million.

    The fair values of the Company’s derivative instruments and the line items on the accompanying consolidated balance sheets to which they were recorded are summarized in the following table:
December 31, 2020December 31, 2019
(in millions)Balance Sheet ClassificationAssetsLiabilitiesNotionalAssetsLiabilitiesNotional
Derivatives designated as hedging instruments:
Foreign exchange forward contracts
Other current assets and liabilities
$5 — $70 $$— $148 
Interest rate swapsOther assets and liabilities 55 1,800 — 27 875 
Derivatives not designated as hedging instruments:
Interest rate swapsOther liabilities 1 356 — 325 
Total derivatives$5 $56 $$30 

    
The pre-tax effect of the Company’s cash flow hedging instruments on other comprehensive (loss) income is summarized in the following table:
Year Ended December 31,
(in millions)202020192018
Foreign exchange forward contracts$1 $$(9)
Interest rate derivatives(28)(22)(6)
Total$(27)$(20)$(15)


    The Company expects approximately $14 million of pre-tax unrealized losses related to its foreign exchange contracts and interest rate derivatives included in AOCI at December 31, 2020 to be reclassified into earnings within the next twelve months. The total amount of cash flow hedge effect on the income statement is immaterial for year ended December 31, 2020.