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Derivative Instruments and Hedging Activities | 9 Months Ended
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Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Transactions Designated as Hedging Instruments Cash Flow Hedges Foreign Currency Contracts The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates. The changes in the fair values of these cash flow hedges are recorded in accumulated other comprehensive loss and are subsequently reclassified into “Cost of goods sold” during the period the sales and purchases are recognized. These amounts offset the effect of the changes in foreign currency rates on the related sale and purchase transactions. During 2021 and 2020, the Company designated certain foreign currency contracts as cash flow hedges of expected future sales and purchases. The total notional value of derivatives that were designated as cash flow hedges was approximately $293.0 million and $395.8 million as of September 30, 2021 and December 31, 2020, respectively. Steel Commodity Contracts During 2021 and 2020, the Company designated certain steel commodity contracts as cash flow hedges of expected future purchases of steel. The total notional value of derivatives that were designated as cash flow hedges was approximately $11.9 million and $14.7 million as of September 30, 2021 and December 31, 2020, respectively. The following tables summarize the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during the three and nine months ended September 30, 2021 and 2020 (in millions):
|  |  | Recognized in Net Income |  |
Three Months Ended September 30, | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income |  | Total Amount of the Line Item in the Condensed Consolidated Statements of Operations Containing Hedge Gains (Losses)
2021 |  |  |  |  |  |  |
Foreign currency contracts(1) | $ | 1.8 |  |  | Cost of goods sold |  | $ | (1.3) |  |  | $ | 2,098.4 |
Commodity contracts(2) | (0.2) |  |  | Cost of goods sold |  | 6.3 |  |  | $ | 2,098.4 |
Total | $ | 1.6 |  |  |  |  | $ | 5.0 |  |  |
2020 |  |  |  |  |  |  |
Foreign currency contracts | $ | (0.1) |  |  | Cost of goods sold |  | $ | 1.0 |  |  | $ | 1,918.8 |
|  |  | Recognized in Net Income |  |
Nine Months Ended September 30, | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income |  | Total Amount of the Line Item in the Condensed Consolidated Statements of Operations Containing Hedge Gains (Losses)
2021 |  |  |  |  |  |  |
Foreign currency contracts(1) | $ | (5.8) |  |  | Cost of goods sold |  | $ | (7.4) |  |  | $ | 6,093.5 |
Commodity contracts(2) | $ | 13.5 |  |  | Cost of goods sold |  | 8.2 |  |  | $ | 6,093.5 |
Total | $ | 7.7 |  |  |  |  | $ | 0.8 |  |  |
2020 |  |  |  |  |  |  |
Foreign currency contracts | $ | 8.1 |  |  | Cost of goods sold |  | $ | 4.2 |  |  | $ | 4,970.7 |
(1) The outstanding contracts as of September 30, 2021 range in maturity through December 2021. (2) The outstanding contracts as of September 30, 2021 range in maturity through July 2022. The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the three months ended September 30, 2021 (in millions):
|  | Before-Tax Amount |  | Income Tax |  | After-Tax Amount
Accumulated derivative net gains as of June 30, 2021 |  | $ | 11.6 |  |  | $ | 3.8 |  |  | $ | 7.8 |
Net changes in fair value of derivatives |  | 1.9 |  |  | 0.3 |  |  | 1.6 |
Net gains reclassified from accumulated other comprehensive loss into income |  | (7.0) |  |  | (2.0) |  |  | (5.0) |
Accumulated derivative net gains as of September 30, 2021 |  | $ | 6.5 |  |  | $ | 2.1 |  |  | $ | 4.4 |
The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the nine months ended September 30, 2021 (in millions):
|  | Before-Tax Amount |  | Income Tax |  | After-Tax Amount
Accumulated derivative net losses as of December 31, 2020 |  | $ | (3.0) |  |  | $ | (0.5) |  |  | $ | (2.5) |
Net changes in fair value of derivatives |  | 11.5 |  |  | 3.8 |  |  | 7.7 |
Net gains reclassified from accumulated other comprehensive loss into income |  | (2.0) |  |  | (1.2) |  |  | (0.8) |
Accumulated derivative net gains as of September 30, 2021 |  | $ | 6.5 |  |  | $ | 2.1 |  |  | $ | 4.4 |
As of September 30, 2021, approximately $0.7 million of derivative net losses and approximately $5.5 million of derivatives net gains, before taxes, remain in accumulated other comprehensive loss held by the Company related to foreign currency contracts and commodity contracts, respectively, as the inventory associated with the losses and gains had not yet been sold. Net Investment Hedges The Company uses non-derivative and derivative instruments to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. For instruments that are designated as hedges of net investments in foreign operations, changes in the fair value of the derivative instruments are recorded in foreign currency translation adjustments, a component of accumulated other comprehensive loss, to offset changes in the value of the net investments being hedged. When the net investment in foreign operations is sold or substantially liquidates, the amounts recorded in accumulated other comprehensive loss are reclassified to earnings. To the extent foreign currency denominated debt is de-designated from a net investment hedge relationship, changes in the value of the foreign currency denominated debt are recorded in earnings through the maturity date. In January 2018, the Company entered into a cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. The cross currency swap expired on January 19, 2021. At maturity of the cross currency swap contract, the Company delivered the notional amount of approximately €245.7 million (or approximately $297.1 million as of January 19, 2021) and received $300.0 million from the counterparties, resulting in a gain of approximately $2.9 million that was recognized in accumulated other comprehensive loss. The Company received quarterly interest payments from the counterparties based on a fixed interest rate until the maturity of the cross currency swap. On January 29, 2021, the Company entered into a new cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. The cross currency swap has an expiration date of January 29, 2028. At maturity of the cross currency swap contract, the Company will deliver the notional amount of approximately €247.9 million (or approximately $287.3 million as of September 30, 2021) and will receive $300.0 million from the counterparties. The Company will receive quarterly interest payments from the counterparties based on a fixed interest rate until the maturity of the cross currency swap. During the three months ended March 31, 2020, the Company designated €110.0 million of its multi-currency revolving credit facility with a maturity date of October 17, 2023 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. In May 2020, the Company repaid the designated amount outstanding under its multi-currency revolving credit facility and the foreign currency denominated debt was de-designated as a net investment hedge. The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions):
| Notional Amount as of
| September 30, 2021 |  | December 31, 2020
Cross currency swap contract | $ | 300.0 |  |  | $ | 300.0 |
The following table summarizes the after-tax impact of changes in the fair value of the instrument designated as a net investment hedge during the three and nine months ended September 30, 2021 and 2020 (in millions):
| Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Three Months Ended |  | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Nine Months Ended
| September 30, 2021 |  | September 30, 2020 |  | September 30, 2021 |  | September 30, 2020
Cross currency swap contract | $ | 5.8 |  |  | $ | (13.3) |  |  | $ | 5.5 |  |  | $ | (11.8) |
Foreign currency denominated debt | — |  |  | — |  |  | — |  |  | 1.7 |
Derivative Transactions Not Designated as Hedging Instruments During 2021 and 2020, the Company entered into foreign currency contracts to economically hedge receivables and payables on the Company and its subsidiaries’ balance sheets that are denominated in foreign currencies other than the functional currency. These contracts were classified as non-designated derivative instruments. Gains and losses on such contracts are substantially offset by losses and gains on the remeasurement of the underlying asset or liability being hedged and are immediately recognized into earnings. As of September 30, 2021 and December 31, 2020, the Company had outstanding foreign currency contracts with a notional amount of approximately $3,390.6 million and $3,326.6 million, respectively. The following table summarizes the impact that changes in the fair value of derivatives not designated as hedging instruments had on net income (in millions):
|  |  | Loss Recognized in Net Income for the Three Months Ended |  | Gain Recognized in Net Income for the Nine Months Ended
| Classification of Gain (Loss) |  | September 30, 2021 |  | September 30, 2020 |  | September 30, 2021 |  | September 30, 2020
Foreign currency contracts | Other expense, net |  | $ | (1.7) |  |  | $ | (7.0) |  |  | $ | 27.6 |  |  | $ | 16.1 |
The table below sets forth the fair value of derivative instruments as of September 30, 2021 (in millions):
| Asset Derivatives as of September 30, 2021 |  | Liability Derivatives as of September 30, 2021
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivative instruments designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 1.9 |  |  | Other current liabilities |  | $ | 2.6 |
Commodity contracts | Other current assets |  | 2.9 |  |  | Other current liabilities |  | 0.6 |
Cross currency swap contract | Other noncurrent assets |  | 7.0 |  |  | Other noncurrent liabilities |  | — |
Derivative instruments not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | 13.2 |  |  | Other current liabilities |  | 9.3 |
Total derivative instruments |  |  | $ | 25.0 |  |  |  |  | $ | 12.5 |
The table below sets forth the fair value of derivative instruments as of December 31, 2020 (in millions):
| Asset Derivatives as of December 31, 2020 |  | Liability Derivatives as of December 31, 2020
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivative instruments designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 1.0 |  |  | Other current liabilities |  | $ | 4.5 |
Commodity contracts | Other current assets |  | 0.5 |  |  | Other current assets |  | — |
Cross currency swap contract | Other noncurrent assets |  | 1.5 |  |  | Other noncurrent liabilities |  | — |
Derivative instruments not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | 12.3 |  |  | Other current liabilities |  | 22.2 |
Total derivative instruments |  |  | $ | 15.3 |  |  |  |  | $ | 26.7 |

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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 http://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 http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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