Derivatives and Risk Management

12 Months Ended

Dec. 31, 2023

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, 2023 and December 31, 2022, we had currency forward contracts outstanding with a total notional amount of $206.9 million and $179.9 million, respectively, that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the second quarter of 2026 and the purchase of certain direct and indirect inventory and other working capital items into the fourth quarter of 2024.

FIXED-TO-FIXED CROSS-CURRENCY SWAP In 2022, we discontinued an existing 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 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, 2023 and December 31, 2022, which was equivalent to $220.7 million and $213.9 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 2022, we discontinued an existing variable-to-fixed interest rate swap, which was in an asset position of $6.1 million on the date that it was discontinued. In 2022, and in the first quarter of 2023, we entered into new variable-to-fixed interest rate swaps to reduce the variability of cash flows associated with interest payments on our variable rate debt. In the third quarter of 2023, we discontinued these variable-to-fixed interest rate swaps, which were in an asset position of $27.2 million on the date that they were discontinued.

Also in the third quarter of 2023, we entered into new variable-to-fixed interest rate swaps to reduce the variability of cash flows associated with interest payments on our variable rate debt. As of December 31, 2023, we have $700.0 million notional amount hedged in relation to our variable-to-fixed interest rate swap into the third quarter of 2027, $200.0 million of which continues into the fourth quarter of 2029.

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
		2023		2022		2021		2023
		(in millions)
Currency forward contracts	Cost of Goods Sold	$	19.9	$	6.5	$	5.6	$	5,455.2	$	15.9
Fixed-to-fixed cross-currency swap	Other Income (Expense), net	(6.6)		13.7		19.0		8.1		0.6
Variable-to-fixed interest rate swap	Interest Expense	3.6		2.7		(14.8)		(201.7)		1.2

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, 2023, December 31, 2022 and December 31, 2021.

The following table summarizes the amount and location of gains 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 Recognized During the Twelve Months Ended December 31,						Total of Financial Statement Line Item
		2023		2022		2021		2023
		(in millions)

Currency forward contracts	Other Income (Expense), Net	$	4.7	$	2.5	$	0.2	$	8.1

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 39% of our consolidated net sales in 2023, 40% in 2022, and 37% in 2021. Accounts and other receivables due from GM were $305.7 million at year-end 2023 and $334.4 million at year-end 2022. Sales to Stellantis N.V. (Stellantis), were approximately 16% of our consolidated net sales in 2023, 18% in 2022 and 19% in 2021. Accounts and other receivables due from Stellantis were $108.1 million at year-end 2023 and $115.3 million at year-end 2022. Sales to Ford Motor Company (Ford) were approximately 12% of our consolidated net sales in 2023, 2022 and 2021. Accounts and other receivables due from Ford were $118.1 million at year-end 2023 and $101.7 million at year end 2022. 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 $120.0 million as of December 31, 2023 and $138.2 million as of December 31, 2022. 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.