Derivatives (Notes)

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5. DERIVATIVES

Our business and financial results are affected by fluctuations in global financial markets, including currency exchange rates and interest 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 March 31, 2024 and December 31, 2023, we had currency forward contracts outstanding with a total notional amount of $227.3 million and $206.9 million, respectively, that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the fourth 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 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. We had notional amounts outstanding under fixed-to-fixed cross-currency swaps of €200.0 million at both March 31, 2024 and December 31, 2023, which were equivalent to $215.8 million and $220.7 million, respectively. The fixed-to-fixed cross-currency swap hedges our exposure to changes in exchange rates on the intercompany loans through the second quarter of 2024.

Variable-to-fixed interest rate swaps In 2023, we entered into variable-to-fixed interest rate swaps to reduce the variability of cash flows associated with interest payments on our variable rate debt. As of March 31, 2024, we have $700.0 million notional amount hedged in relation to our variable-to-fixed interest rate swaps 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		Gain (Loss) Reclassified During				Total of Financial		Gain Expected
	of Gain (Loss)	Three Months Ended			Statement		to be Reclassified
	Reclassified into	March 31,			Line Item		During the
	Net Income		2024		2023		2024		Next 12 Months
			(in millions)

Currency forward contracts	Cost of Goods Sold		$	4.7	$	3.3	$	1,408.4	$	17.0
Fixed-to-fixed cross-currency swap	Other Income (Expense), net		5.0		(2.7)		—		0.4
Variable-to-fixed interest rate swap	Interest Expense		0.3		0.6		(49.0)		4.3

See Note 7 - Reclassifications out of Accumulated Other Comprehensive Income (Loss) (AOCI) for amounts recognized in other comprehensive income during the three months ended March 31, 2024 and 2023.

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


	Location		Gain Recognized During				Total of Financial
	of Gain	Three Months Ended			Statement
	Recognized in	March 31,			Line Item
	Net Income		2024		2023		2024
			(in millions)


Currency forward contracts	Other Income (Expense), net		$	1.1	$	2.1	$	—