Derivatives and Risk Management

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5. DERIVATIVES AND RISK MANAGEMENT

DERIVATIVE FINANCIAL INSTRUMENTS In the normal course of business, we are exposed to market risk associated with changes in foreign currency exchange rates and interest rates. To manage a portion of these inherent risks, we may purchase certain types of derivative financial instruments based on management's judgment of the trade-off between risk, opportunity and cost. We do not hold or issue derivative financial instruments for trading or speculative purposes. The impact of hedge ineffectiveness was not significant in any of the periods presented.

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 December 31, 2022 and December 31, 2021, we had currency forward contracts outstanding with a total notional amount of $179.9 million and $164.7 million, respectively, that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the third quarter of 2025 and the purchase of certain direct and indirect inventory and other working capital items into the fourth quarter of 2023.

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. In the second quarter of 2022, we discontinued this fixed-to-fixed cross-currency swap, which was in an asset position of $9.7 million on the date that it was discontinued.

Also in the second quarter of 2022, we entered into a new 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. We had notional amounts outstanding under the fixed-to fixed cross-currency swap of €200.0 million at both December 31, 2022 and December 31, 2021, which was equivalent to $213.9 million and $226.9 million, 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. In the second quarter of 2022, we discontinued this variable-to-fixed interest rate swap, which was in an asset position of $6.1 million on the date that it was discontinued.

Also in the second quarter of 2022, we entered into a new variable-to-fixed interest rate swap to reduce the variability of cash flows associated with interest payments on our variable rate debt. As of December 31, 2022, we have $500.0 million notional amount hedged in relation to our variable-to-fixed interest rate swap into the third quarter of 2027.

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


	Location of Gain (Loss) Reclassified into Net Income (Loss)	Gain (Loss) Reclassified During the Twelve Months Ended December 31,						Total of Financial Statement Line Item		Gain Expected to be Reclassified During the Next 12 Months
		2022		2021		2020		2022
		(in millions)
Currency forward contracts	Cost of Goods Sold	$	6.5	$	5.6	$	(2.9)	$	5,097.5	$	8.2
Fixed-to-fixed cross-currency swap	Other Expense, net	13.7		19.0		(18.7)		(1.8)		0.3
Variable-to-fixed interest rate swap	Interest Expense	2.7		(14.8)		(14.2)		(174.5)		2.4

See Note 12 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) for amounts recognized in Accumulated other comprehensive income (loss) during the years ended December 31, 2022, December 31, 2021 and December 31, 2020.

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


	Location of Gain (Loss) Recognized in Net Income (Loss)	Gain (Loss) Recognized During the Twelve Months Ended December 31,						Total of Financial Statement Line Item
		2022		2021		2020		2022
		(in millions)
Currency forward contracts	Cost of Goods Sold	$	—	$	—	$	(6.7)	$	5,097.5
Currency forward contracts	Other Expense, Net	2.5		0.2		0.6		(1.8)

CONCENTRATIONS OF CREDIT RISK In the normal course of business, we provide credit to customers. We periodically evaluate the creditworthiness of our customers and we maintain reserves for potential credit losses.

Sales to General Motors Company (GM) were approximately 40% of our consolidated net sales in 2022, 37% in 2021, and 39% in 2020. Accounts and other receivables due from GM were $334.4 million at year-end 2022 and $290.2 million at year-end 2021. Sales to Stellantis N.V. (Stellantis), were approximately 18% of our consolidated net sales in 2022, and 19% in both 2021 and 2020. Accounts and other receivables due from Stellantis were $115.3 million at year-end 2022 and $137.1 million at year-end 2021. Sales to Ford Motor Company (Ford) were approximately 12% of our consolidated net sales in 2022, 2021 and 2020. Accounts and other receivables due from Ford were $101.7 million at year-end 2022 and $108.8 million at year end 2021. No other single customer accounted for more than 10% of our consolidated net sales in any year presented.

In addition, our total GM postretirement cost sharing asset was $138.2 million as of December 31, 2022 and $213.2 million as of December 31, 2021. See Note 7 - Employee Benefit Plans for more detail on this cost sharing asset.

We diversify the concentration of invested cash and cash equivalents among different financial institutions and we monitor the selection of counterparties to other financial instruments to avoid unnecessary concentrations of credit risk.