XML 29 R19.htm IDEA: XBRL DOCUMENT
v3.23.3

Derivatives and Hedging | 9 Months Ended
--- | ---
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging | Derivatives and Hedging We utilize the following derivative instruments designated as cash flow hedges: •foreign exchange forward contracts to hedge certain forecasted sales transactions denominated in foreign currencies; •cross-currency swaps used to manage variability due to movements in foreign currency exchange rates related to a Euro-denominated intercompany loan; and •pay-fixed rate, receive-floating rate interest rate swaps to effectively convert portions of our variable-rate debt to fixed. We also utilize cross-currency swaps designated as net investment hedges to mitigate the risk associated with exchange rate fluctuations on our net investment in certain foreign operations. The following table summarizes our outstanding derivative instruments on a gross basis, all of which are considered Level 2 financial instruments:
| Notional Amount |  | Fair Value of Derivative Assets(2) |  | Fair Value of Derivative Liabilities(2)
| September 30, 2023 |  | December 31, 2022 |  | September 30, 2023 |  | December 31, 2022 |  | September 30, 2023 |  | December 31, 2022
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts | $ | 479.9 |  |  | $ | 364.7 |  |  | $ | 7.8 |  |  | $ | 9.4 |  |  | $ | 1.2 |  |  | $ | 2.0 |
Cross-currency swaps(1) | 538.5 |  |  | 549.7 |  |  | 10.3 |  |  | 15.8 |  |  | — |  |  | 2.2 |
Interest rate swaps | 1,964.9 |  |  | 1,980.5 |  |  | 187.7 |  |  | 173.0 |  |  | — |  |  | — |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps(1) | 690.3 |  |  | 704.6 |  |  | 13.3 |  |  | 20.3 |  |  | — |  |  | 0.7 |
Total hedges | $ | 3,673.6 |  |  | $ | 3,599.5 |  |  | $ | 219.1 |  |  | $ | 218.5 |  |  | $ | 1.2 |  |  | $ | 4.9 |
_________________________________ (1)The notional values of the cross-currency swaps have been translated from Euros to U.S. dollars at the foreign currency rates in effect of approximately 1.06 and 1.07 as of September 30, 2023 and December 31, 2022, respectively. (2)In our balance sheets, all derivative assets are recorded within prepaid expenses and other current assets and all derivative liabilities are recorded within accrued expenses and other current liabilities. The following table summarizes the effect of our hedging relationships on accumulated other comprehensive income (AOCI):
| Unrealized Gains (Losses) Recognized in Other Comprehensive Income
| Three Months Ended |  | Nine Months Ended
| September 30, 2023 |  | September 30, 2022 |  | September 30, 2023 |  | September 30, 2022
Cash flow hedges: |  |  |  |  |  |  |
Foreign exchange forward contracts(1) | $ | 8.7 |  |  | $ | 24.2 |  |  | $ | (7.2) |  |  | $ | 48.0 |
Cross-currency swaps | (7.8) |  |  | (0.5) |  |  | (12.4) |  |  | 42.9 |
Interest rate swaps | 15.6 |  |  | 78.2 |  |  | 14.4 |  |  | 171.3 |
Net investment hedges: |  |  |  |  |  |  |
Cross-currency swaps | 12.3 |  |  | 43.7 |  |  | (7.0) |  |  | 65.3 |
Total hedges | $ | 28.8 |  |  | $ | 145.6 |  |  | $ | (12.2) |  |  | $ | 327.5 |
_________________________________ (1)Amounts include gains and losses realized upon contract settlement but not yet recognized into earnings from AOCI. The following tables summarize the locations and amounts of gains (losses) recognized within earnings related to our hedging relationships:
| Three Months Ended September 30, 2023 |  | Three Months Ended September 30, 2022
| Revenue |  | Interest Expense |  | Other Income (Expense), Net |  | Revenue |  | Interest Expense |  | Other Income (Expense), Net
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | $ | 3.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.3 |  |  | $ | — |  |  | $ | — |
Cross-currency swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income(1) | — |  |  | 2.4 |  |  | 17.4 |  |  | — |  |  | 2.7 |  |  | 35.2 |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | — |  |  | 17.8 |  |  | — |  |  | — |  |  | 2.4 |  |  | — |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | — |  |  | 3.1 |  |  | — |  |  | — |  |  | 3.6 |  |  | — |
Total hedges | $ | 3.8 |  |  | $ | 23.3 |  |  | $ | 17.4 |  |  | $ | 2.3 |  |  | $ | 8.7 |  |  | $ | 35.2 |
_________________________________ (1)The amounts reflected in other income (expense), net include $(17.4) million and $(34.9) million reclassified from AOCI to offset the earnings impact of the remeasurement of the Euro-denominated intercompany loan hedged by cross-currency swaps during the three months ended September 30, 2023 and 2022, respectively.
| Nine Months Ended September 30, 2023 |  | Nine Months Ended September 30, 2022
| Revenue |  | Interest Expense |  | Other Income (Expense), Net |  | Revenue |  | Interest Expense |  | Other Income (Expense), Net
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forward contracts: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | $ | 13.5 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.9 |  |  | $ | — |  |  | $ | — |
Cross-currency swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income(1) | — |  |  | 7.2 |  |  | 6.8 |  |  | — |  |  | 12.3 |  |  | 88.0 |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | — |  |  | 48.3 |  |  | — |  |  | — |  |  | (13.6) |  |  | — |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps: |  |  |  |  |  |  |  |  |  |  |
Reclassified from AOCI into income | — |  |  | 9.4 |  |  | — |  |  | — |  |  | 7.9 |  |  | — |
Total hedges | $ | 13.5 |  |  | $ | 64.9 |  |  | $ | 6.8 |  |  | $ | 0.9 |  |  | $ | 6.6 |  |  | $ | 88.0 |
_________________________________ (1)The amounts reflected in other income (expense), net include $(6.9) million and $(87.8) million reclassified from AOCI to offset the earnings impact of the remeasurement of the Euro-denominated intercompany loan hedged by cross-currency swaps during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we estimate that $102.2 million of net deferred gains related to our designated hedges will be recognized in earnings over the next 12 months. No amounts have been excluded from our hedge effectiveness testing. Risk Management Strategies Foreign Exchange Forward Contracts From time-to-time, we may enter into foreign exchange forward contracts with financial institutions to hedge certain forecasted sales transactions denominated in foreign currencies. We designate these forward contracts as cash flow hedges, which are recognized as either assets or liabilities at fair value. At September 30, 2023, all such contracts had maturities of 24 months or less. Cross-Currency Swaps In April 2017, in order to manage variability due to movements in foreign currency rates related to a Euro-denominated intercompany loan, we entered into five-year cross-currency swaps. In March 2022, we entered into a transaction to extend the maturity of these swaps to August 31, 2027. We and the existing counterparties executed cancellation agreements to terminate all rights, obligations and liabilities associated with the original swaps. On the modification date, the existing cash flow hedging relationships were de-designated and new hedging relationships incorporating the terms of the new swaps (the 2022 Cross-Currency Swaps) were designated as either cash flow hedging relationships or net investment hedging relationships. The 2022 Cross-Currency Swaps had an aggregate amortizing notional amount of €1,184.2 million at inception (approximately $1,262.5 million). The swaps designated as cash flow hedging relationships convert the 3.00% fixed rate Euro-denominated interest and principal receipts on the intercompany loan into U.S. dollar interest and principal receipts at a fixed rate of 4.81%. The swaps designated as net investment hedging relationships hedge the foreign currency exposure of our net investment in certain Euro denominated functional currency subsidiaries. Pursuant to the contracts, the Euro notional value will be exchanged for the U.S. dollar notional value at maturity. Interest Rate Swaps In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate borrowings under the previously issued term loans maturing in 2024, which were refinanced with the 2029 Term Loans, to a fixed rate of 5.44%. In March 2022, we entered into a transaction to extend the maturity of the swaps to August 31, 2027. We and the existing counterparties executed cancellation agreements to terminate all rights, obligations and liabilities associated with the original swaps. On the modification date, the existing cash flow hedging relationships were de-designated and new hedging relationships incorporating the terms of the new interest rate swaps (the 2022 Interest Rate Swaps) were designated. The 2022 Interest Rate Swaps, which had an amortizing notional amount of $1,262.5 million at inception, serve to convert a portion of the variable-rate borrowings under the 2029 Term Loans to a fixed rate of 4.81%. In November 2022, in conjunction with the Credit Facility refinancing discussed in our 2022 Form 10-K, we terminated these swaps and entered into new SOFR-based interest rate swaps. This modification impacted no critical terms other than the reference rate change from LIBOR to SOFR and thus had no impact on our hedging relationships or financial statements. In August 2020, in conjunction with the issuance of the 2027 Term Loans, we entered into seven-year pay-fixed rate, receive-floating rate interest rate swaps to effectively convert the variable one-month LIBOR interest rate on the 2027 Term Loans borrowings to a fixed rate of 0.705%. These interest rate swaps, which mature on August 10, 2027, had an aggregate notional amount of $750.0 million at inception. In May 2023, in conjunction with the first Credit Facility amendment discussed in Note 9, we terminated these swaps and entered into new SOFR-based interest rate swaps. This modification impacted no critical terms other than the reference rate change from LIBOR to SOFR and thus had no impact on our hedging relationships or financial statements. The objective of these arrangements, which are designated as cash flow hedges and recognized as assets or liabilities at fair value, is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The unrealized gains and losses on the swaps are included in AOCI and will be recognized in earnings within or against interest expense when the hedged interest payments are accrued each month.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration