Derivatives (Notes)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

6. DERIVATIVES

Our business and financial results are affected by fluctuations in global financial markets, including interest rates and currency exchange rates. Our hedging policy has been developed to manage these risks to an acceptable level based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. We do not hold financial instruments for trading or speculative purposes.

Currency derivative contracts From time to time, we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates relating to certain foreign currencies. As of both March 31, 2022 and December 31, 2021, we had currency forward contracts outstanding with a total notional amount of $164.7 million, that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the third quarter of 2024 and the purchase of certain direct and indirect inventory and other working capital items into the fourth quarter of 2022.

Fixed-to-fixed cross-currency swap In 2020, we entered into a fixed-to-fixed cross-currency swap to reduce the variability of functional currency equivalent cash flows associated with changes in exchange rates on certain Euro-based intercompany loans. The notional amount of the fixed-to-fixed cross-currency swap is €200.0 million, which was equivalent to $221.3 million and $226.9 million at March 31, 2022 and December 31, 2021, respectively. The fixed-to-fixed cross-currency swap hedges our exposure to changes in exchange rates on the intercompany loans into the second quarter of 2024.

Variable-to-fixed interest rate swap In 2019, we entered into a variable-to-fixed interest rate swap to reduce the variability of cash flows associated with interest payments on our variable rate debt. We have the following notional amounts hedged in relation to our variable-to-fixed interest rate swap: $750.0 million through May 2022, $600.0 million through May 2023 and $500.0 million through May 2024.

The following table summarizes the reclassification of pre-tax derivative gains and losses into net income from accumulated other comprehensive income (loss) for those derivative instruments designated as cash flow hedges under ASC 815 - Derivatives and Hedging:


	Location	Gain (Loss) Reclassified During				Total of Financial		Gain (Loss) Expected
	of Gain (Loss)	Three Months Ended					Statement		to be Reclassified
	Reclassified into	March 31,					Line Item		During the
	Net Income	2022		2021					2022		Next 12 Months
		(in millions)

Currency forward contracts	Cost of Goods Sold	$	1.2	$	2.3				$	1,249.4	$	5.9
Fixed-to-fixed cross-currency swap	Other Income (Expense), net	6.0		10.1					(1.0)		1.7
Variable-to-fixed interest rate swap	Interest Expense	(2.9)		(4.2)					(44.7)		(2.0)

See Note 12 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (AOCI) for amounts recognized in other comprehensive income (loss) during the three months ended March 31, 2022 and 2021.

The following table summarizes the amount and location of gains and losses recognized in the Condensed Consolidated Statements of Income for those derivative instruments not designated as hedging instruments under ASC 815:


		Gain (Loss) Recognized During				Total of Financial
	Location of Gain (Loss)	Three Months Ended					Statement Line
	Recognized in	March 31,					Item
	Net Income	2022		2021				2022
		(in millions)


Currency forward contracts	Other Income (Expense), net	$	1.0	$	(0.1)			$	(1.0)