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Derivatives
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives

10. Derivatives

The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, including the euro, and, to a lesser degree, the British pound, the Canadian dollar, and other currencies, related to forecasted revenues and settlement assets and obligations, as well as on certain foreign currency denominated cash and other asset and liability positions. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to minimize its exposures related to changes in foreign currency exchange rates and interest rates.

The Company executes derivatives with established financial institutions; the substantial majority of these financial institutions have a credit rating of “A-” or higher from a major credit rating agency. The primary credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis, while also monitoring the concentration of its contracts with any individual counterparty.

Foreign Currency Derivatives

The Company’s policy is to use longer duration foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of one to two years, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of September 30, 2025, these foreign currency forward contracts had maturities of a maximum of 36 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness. The initial value of the excluded components is amortized into Revenues within the Company’s Condensed Consolidated Statements of Income.

The Company also uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability positions. None of these contracts are designated as accounting hedges.

The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of September 30, 2025 and December 31, 2024 were as follows (in millions):

 

September 30, 2025

 

 

December 31, 2024

 

Contracts designated as hedges:

 

 

 

 

 

Euro

$

284.7

 

 

$

210.5

 

Canadian dollar

 

149.1

 

 

 

111.7

 

British pound

 

117.9

 

 

 

75.6

 

Australian dollar

 

74.2

 

 

 

51.2

 

Swiss franc

 

58.9

 

 

 

41.6

 

Swedish krona

 

32.4

 

 

(b)

 

Other (a)

 

50.5

 

 

 

35.7

 

Contracts not designated as hedges:

 

 

 

 

 

Euro

$

443.1

 

 

$

499.1

 

British pound

 

141.0

 

 

 

118.1

 

Mexican peso

 

98.2

 

 

 

85.7

 

Australian dollar

 

96.6

 

 

 

49.0

 

Thai baht

 

68.9

 

 

(b)

 

Indian rupee

 

52.6

 

 

 

57.7

 

Canadian dollar

 

50.4

 

 

 

35.5

 

Chinese yuan

 

40.3

 

 

(b)

 

Philippine peso

 

39.8

 

 

 

89.8

 

Swiss franc

 

30.1

 

 

 

32.6

 

Singapore dollar

 

29.6

 

 

 

31.4

 

Brazilian real

 

28.0

 

 

(b)

 

Other (a)

 

162.2

 

 

 

208.5

 

 

 

(a)
Comprised of exposures to various currencies; none of these individual currency exposures is greater than $25 million.
(b)
Amount is below $25 million for the relevant period; therefore, the balance has been included within “Other.”

 

Balance Sheet

The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (in millions):

 

 

Derivative Assets

 

 

Derivative Liabilities

 

 

 

 

Fair Value

 

 

 

 

Fair Value

 

 

Balance Sheet

 

September 30,

 

 

December 31,

 

 

Balance Sheet

 

September 30,

 

 

December 31,

 

 

Location

 

2025

 

 

2024

 

 

Location

 

2025

 

 

2024

 

Derivatives designated as hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency cash flow hedges

 

Other assets

 

$

8.8

 

 

$

24.4

 

 

Other liabilities

 

$

40.6

 

 

$

0.2

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency

 

Other assets

 

 

3.9

 

 

 

5.1

 

 

Other liabilities

 

 

2.6

 

 

 

3.4

 

Total derivatives

 

 

 

$

12.7

 

 

$

29.5

 

 

 

 

$

43.2

 

 

$

3.6

 

 

Offsetting of Derivative Assets and Liabilities

The Company has elected to present derivative assets and liabilities on a gross basis in the Condensed Consolidated Balance Sheets; however, derivatives associated with the Company's foreign currency exchange contracts that are subject to a master netting arrangement or similar agreement would have resulted in an offset of $4.5 million and $3.4 million to both derivative assets and liabilities as of September 30, 2025 and December 31, 2024, respectively. This includes the fair values of derivative assets and liabilities associated with contracts that include netting language that the Company believes to be enforceable. The Company’s rights under these agreements generally allow for transactions to be settled on a net basis, including upon early termination, which could occur upon the counterparty’s default, a change in control, or other conditions.

Income Statement

Cash Flow Hedges

The effective portion of the change in fair value of derivatives that qualify as cash flow hedges is recorded in AOCL in the Company’s Condensed Consolidated Balance Sheets. Generally, amounts are recognized in income when the related forecasted transaction affects earnings.

The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and nine months ended September 30, 2025 and 2024 (in millions):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Foreign currency derivatives (a)

 

$

8.6

 

 

$

(17.8

)

 

$

(63.2

)

 

$

(2.6

)

 

(a)
Gains of $1.2 million and $1.7 million for the three months ended September 30, 2025 and 2024, respectively, and $4.0 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively, represent the amounts excluded from the assessment of effectiveness and recognized in other comprehensive income, for which an amortization approach is applied.

The following table presents the location and amounts of pre-tax net gains/(losses) from cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 (in millions):

 

 

Three Months Ended September 30,

 

 

2025

 

 

2024

 

 

Revenues

 

 

Interest Expense

 

 

Revenues

 

 

Interest Expense

 

Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded

 

$

1,032.6

 

 

$

(37.0

)

 

$

1,036.0

 

 

$

(32.2

)

Gains/(losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Losses reclassified from AOCL into earnings

 

 

(3.0

)

 

 

—

 

 

 

(2.2

)

 

 

—

 

Amount excluded from effectiveness testing recognized in earnings based on an amortization approach

 

 

2.6

 

 

 

—

 

 

 

1.6

 

 

 

—

 

Interest rate derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Losses reclassified from AOCL into earnings

 

 

—

 

 

 

(0.1

)

 

 

—

 

 

 

—

 

 

 

 

Nine Months Ended September 30,

 

 

2025

 

 

2024

 

 

Revenues

 

 

Interest Expense

 

 

Revenues

 

 

Interest Expense

 

Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded

 

$

3,042.3

 

 

$

(106.3

)

 

$

3,151.5

 

 

$

(89.4

)

Gains/(losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Gains/(losses) reclassified from AOCL into earnings

 

 

(4.5

)

 

 

—

 

 

 

1.8

 

 

 

—

 

Amount excluded from effectiveness testing recognized in earnings based on an amortization approach

 

 

7.2

 

 

 

—

 

 

 

4.8

 

 

 

—

 

Interest rate derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Gains reclassified from AOCL into earnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.1

 

 

Undesignated Hedges

 

The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and nine months ended September 30, 2025 and 2024 (in millions):

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

Derivatives

 

Location

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Foreign currency derivatives (a)

 

Selling, general, and administrative

 

$

13.3

 

 

$

(22.5

)

 

$

(17.2

)

 

$

5.1

 

 

(a)
The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $(12.4) million and $25.1 million for the three months ended September 30, 2025 and 2024, respectively, and $25.5 million and $(5.3) million for the nine months ended September 30, 2025 and 2024, respectively.

All cash flows associated with derivatives are included in Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

Based on September 30, 2025 foreign exchange rates, an accumulated other comprehensive pre-tax loss of $19.9 million related to the foreign currency forward contracts is expected to be reclassified into Revenues within the next 12 months.