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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company uses derivative financial instruments to manage its currency exchange rate risk and its interest rate risk as summarized below. Notional amounts are stated in United States dollar equivalents at spot exchange rates at the respective dates. The Company does not enter into these arrangements for trading or speculation purposes.
| Notional Amount
| As of December 31,
| 2022 |  | 2021
| (in millions)
Foreign currency forward exchange contracts | $ | 1,678.4 |  |  | $ | 1,498.8 |
Cross currency swap contracts | 300.0 |  |  | 300.0 |
The following table presents the location and fair value amounts of derivative instruments reported in the consolidated balance sheets (in millions):
|  |  | Fair Value
|  |  | As of December 31,
| Balance Sheet Location |  | 2022 |  | 2021
Derivatives designated as hedging instruments |  |  |  |  |
Assets |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 24.9 |  |  | $ | 36.2 |
Cross currency swap contracts | Other assets |  | $ | 40.6 |  |  | $ | 19.1 |
Liabilities |  |  |  |  |
Foreign currency contracts | Accrued and other liabilities |  | $ | 20.7 |  |  | $ | 3.9 |
Foreign currency contracts | Other liabilities |  | $ | 6.5 |  |  | $ | — |
The following table presents the effect of master-netting agreements and rights of offset on the consolidated balance sheets (in millions):
|  |  |  |  |  |  | Gross Amounts Not Offset in the Consolidated Balance Sheet |  |
|  |  | Gross Amounts Offset in the Consolidated Balance Sheet |  | Net Amounts Presented in the Consolidated Balance Sheet |  |
December 31, 2022 | Gross Amounts |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
Derivative Assets |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 24.9 |  |  | $ | — |  |  | $ | 24.9 |  |  | $ | (12.0) |  |  | $ | — |  |  | $ | 12.9 |
Cross currency swap contracts | $ | 40.6 |  |  | $ | — |  |  | $ | 40.6 |  |  | $ | — |  |  | $ | — |  |  | $ | 40.6 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 27.2 |  |  | $ | — |  |  | $ | 27.2 |  |  | $ | (12.0) |  |  | $ | — |  |  | $ | 15.2 |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |
Derivative Assets |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 36.2 |  |  | $ | — |  |  | $ | 36.2 |  |  | $ | (2.8) |  |  | $ | — |  |  | $ | 33.4 |
Cross currency swap contracts | $ | 19.1 |  |  | $ | — |  |  | $ | 19.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 19.1 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 3.9 |  |  | $ | — |  |  | $ | 3.9 |  |  | $ | (2.8) |  |  | $ | — |  |  | $ | 1.1 |
The following tables present the effect of derivative and non-derivative hedging instruments on the consolidated statements of operations and consolidated statements of comprehensive income:
|  | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |  | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income |  | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income
|  | 2022 |  | 2021 |  | 2022 |  | 2021
|  | (in millions) |  |  |  | (in millions)
Cash flow hedges |  |  |  |  |  |  |  |  |  |
Foreign currency contracts |  | $ | 81.7 |  |  | $ | 56.7 |  |  | Cost of sales |  | $ | 88.4 |  |  | $ | (23.0) |
|  |  |  |  |  | Selling, general, and administrative expenses |  | $ | — |  |  | $ | (0.6) |
|  | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |  | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income |  | Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
|  | 2022 |  | 2021 |  |  | 2022 |  | 2021
|  | (in millions) |  |  |  | (in millions)
Net investment hedges |  |  |  |  |  |  |  |  |  |
Cross currency swap contracts |  | $ | 21.6 |  |  | $ | 18.4 |  |  | Interest expense |  | $ | 7.0 |  |  | $ | 6.4 |
The cross currency swap contracts have an expiration date of June 15, 2028. At maturity of the cross currency swap contracts, the Company will deliver the notional amount of €257.2 million and will receive $300.0 million from the counterparties. The Company will receive semi-annual interest payments from the counterparties based on a fixed interest rate until maturity of the agreements.
|  |  | Amount of Gain or (Loss) Recognized in Income on Derivative
| Location of Gain or (Loss) Recognized in Income on Derivative |
| 2022 |  | 2021 |  | 2020
|  |  | (in millions)
Fair value hedges |  |  |  |  |  |  |
Foreign currency contracts | Other income, net |  | $ | (3.9) |  |  | $ | 11.6 |  |  | $ | (1.4) |
|  |  | Amount of Gain or (Loss) Recognized in Income on Derivative
| Location of Gain or (Loss) Recognized in Income on Derivative |
| 2022 |  | 2021 |  | 2020
|  |  | (in millions)
Derivatives not designated as hedging instruments |  |  |  |  |  |  |
Foreign currency contracts | Other income, net |  | $ | 44.0 |  |  | $ | 27.4 |  |  | $ | (15.1) |
The following tables present the effect of fair value and cash flow hedge accounting on the consolidated statements of operations:
| Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
| Twelve Months Ended December 31, 2022
| Cost of sales |  | Selling, general, and administrative expenses |  |  |  | Other Income, net
Total amounts of income and expense line items shown in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded | $ | (1,080.4) |  |  | $ | (1,567.6) |  |  |  |  | $ | 2.6 |
The effects of fair value and cash flow hedging: |  |  |  |  |  |  |
Gain (loss) on fair value hedging relationships: |  |  |  |  |  |  |
Foreign currency contracts: |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  |  |  | 5.5 |
Derivatives designated as hedging instruments | — |  |  | — |  |  |  |  | (5.5) |
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach | — |  |  | — |  |  |  |  | 1.6 |
Gain (loss) on cash flow hedging relationships: |  |  |  |  |  |  |
Foreign currency contracts: |  |  |  |  |  |  |
Amount of gain (loss) reclassified from accumulated OCI into income | 88.4 |  |  | — |  |  |  |  | — |
| Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
| Twelve Months Ended December 31, 2021
| Cost of sales |  | Selling, general, and administrative expenses |  |  |  | Other Income, net
Total amounts of income and expense line items shown in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded | $ | (1,248.9) |  |  | $ | (1,493.7) |  |  |  |  | $ | 12.7 |
The effects of fair value and cash flow hedging: |  |  |  |  |  |  |
Gain (loss) on fair value hedging relationships: |  |  |  |  |  |  |
Foreign currency contracts: |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  |  |  | (9.0) |
Derivatives designated as hedging instruments | — |  |  | — |  |  |  |  | 9.0 |
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach | — |  |  | — |  |  |  |  | 2.6 |
Gain (loss) on cash flow hedging relationships: |  |  |  |  |  |  |
Foreign currency contracts: |  |  |  |  |  |  |
Amount of gain (loss) reclassified from accumulated OCI into income | (23.0) |  |  | (0.6) |  |  |  |  | — |
The Company expects that during 2023 it will reclassify to earnings a $29.2 million gain currently recorded in "Accumulated Other Comprehensive Loss." For the years ended December 31, 2022, 2021, and 2020, the Company did not record any gains or losses due to hedge ineffectiveness.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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