Derivative Instruments

3 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company enters into derivative instrument agreements, including forward foreign currency exchange contracts, interest rate swaps, and cross currency swaps to manage risk in connection with changes in foreign currency and interest rates. The Company hedges committed exposures and does not engage in speculative transactions. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit.

As of September 30, 2023, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts, EUR forward contract and CNY forward contracts were $566.3 million, $436.4 million, $321.7 million and $4.6 million (CNY31.7 million), respectively.

Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings. There were no amounts recognized due to ineffectiveness during the three and nine months ended September 30, 2023 and September 30, 2022.

The effects of fair value and cash flow hedge accounting on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the nine months ended September 30, were as follows:



				2023					2022
(in thousands)				Cost of sales		Interest income (expense), net and other finance costs	Other & foreign exchange loss, net		Cost of sales	Interest income (expense), net and other finance costs	Other & foreign exchange loss, net
Total amounts of income and expense line items presented in the Condensed Consolidated Statement of Earnings in which the effects of fair value or cash flow hedges are recorded				$	888,835	18	$	(1,471)	899,828	(6,568)	(3,814)
The effects of fair value and cash flow hedging
	Gain or (loss) on cash flow hedging relationships
		Interest contracts:
			Amount of gain or (loss) reclassified from OCI to earnings	—		11,409	—		—	(3,315)	—
		Cross currency swap contract
			Amount of gain or (loss) reclassified from OCI to earnings	—		4,088	6,508		—	(4,020)	57,560
		Forward contract
			Amount of gain reclassified from OCI to earnings	60		—	—		163	—	—

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the three months ended September 30, 2023 and 2022 were as follows:


Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Earnings	Gain (Loss) Reclassified from OCI into Earnings
(in thousands)	2023		2022			2023		2022
Interest rate contracts	$	4,959	$	18,696	Interest expense	$	4,302	$	(337)
Cross currency contracts	12,156		23,977		Interest expense	1,483		(5,979)
Forward contracts	(122)		—		FX gain (loss)	11,753		28,437
					Cost of goods sold	(20)		—
Total	$	16,993	$	42,673		$	17,518	$	22,121

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the nine months ended September 30, 2023 and 2022 were as follows:


Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Earnings	Gain (Loss) Reclassified from OCI into Earnings
(in thousands)	2023		2022			2023		2022
Interest rate contracts	$	11,505	$	25,571	Interest expense	$	11,409	$	(3,315)
Cross currency contracts	4,137		46,692		Interest expense	4,088		(4,020)
Forward contracts	(535)		—		FX gain (loss)	6,508		57,560
					Cost of goods sold	60		163
Total	$	15,107	$	72,263		$	22,065	$	50,388

For the three months ending September 30, 2023 and September 30, 2022 gains on the net investment hedge of $3.2 million and $16.9 million were included in OCI, respectively. For the three months ending September 30, 2023 and September 30, 2022, excluded gains of $1.3 million and $1.3 million were reclassified from OCI to interest expense, respectively.

For the nine months ending September 30, 2023 losses on the net investment hedge, and September 30, 2022 gains on the net investment hedge of $1.1 million and $28.2 million were included in OCI, respectively. For the nine months ending September 30, 2023 and September 30, 2022, excluded gains of $3.8 million and $2.4 million were reclassified from OCI to interest expense, respectively.

As of September 30, 2023, the aggregate fair values of the Company’s derivative instruments on the Condensed Consolidated Balance Sheet were comprised of an asset of $42.8 million, of which $19.5 million is included in other current assets, and the balance of $23.3 million as other non-current assets, and of a non-current liability of $9.5 million included as deferred income tax and other long-term liabilities.