Our ongoing business operations expose us to various risks, such as fluctuating interest rates, foreign currency exchange rates and increasing commodity prices. To manage these market risks, we periodically enter into derivative financial instruments, such as interest rate swaps, options and foreign exchange contracts for periods consistent with, and for notional amounts equal to or less than, the related underlying exposures. We do not purchase or hold any derivative financial instruments for investment or trading purposes. All derivatives are recorded in our consolidated balance sheet at fair value.

We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany loans. As of both December 31, 2023 and December 31, 2022, the total amount of these forward exchange contracts was Singapore Dollar ("SGD") 601.5 million and $13.4 million. We have also entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany demand notes which were executed in June 2023. As of December 31, 2023, the total amount of these forward exchange contracts was Euro ("EUR") 278.6 million and SGD 94.0 million.

In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions denominated in foreign currencies. As of December 31, 2023, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows:

In November and December 2019, in conjunction with the repayment of the outstanding long-term borrowings under our Credit Facility denominated in Euro and Japanese Yen, we de-designated these borrowings as hedges of our net investments in certain European subsidiaries and Daikyo. The amounts recorded as cumulative translation adjustments within accumulated other comprehensive loss related to these borrowings (prior to de-designation) will remain in accumulated other comprehensive loss indefinitely, unless certain future events occur, such as the disposition of the operations for which the net investment hedges relate.

In December 2019, we entered into a five-year floating-to-floating forward-starting cross-currency swap (the “cross-currency swap”) for $90 million, which we designated as a hedge of our net investment in Daikyo. The notional amount of the cross-currency swap is ¥8.9 billion ($81.0 million) as of December 31, 2023. Under the cross-currency swap, we receive floating interest rate payments based on USD compounded SOFR plus a margin, in return for paying floating interest rate payments based on Japanese Yen ("Yen") Tokyo Overnight Average Rate ("TONAR") plus a margin. In addition, we receive periodic fixed payments of USD in return for paying fixed principal payments of Yen.

Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception.

From November 2017 through December 2023, we purchased several series of call options for a total of 995,426 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regard to a portion of our forecasted elastomer purchases.

As of December 31, 2023, we had outstanding contracts to purchase 206,316 barrels of crude oil from December 2023 to June 2025, at a weighted-average strike price of $88.78 per barrel.

Please refer to Note 12, Fair Value Measurements, for the balance sheet location and fair values of our derivative instruments as of December 31, 2023 and 2022.

The following table summarizes the effects of derivative instruments designated as fair value hedges in our consolidated statements of income for the years ended December 31:


	Amount of Gain (Loss) Recognized in Income						Location on Statement of Income
($ in millions)	2023		2022		2021
Fair Value Hedges:
Hedged item (intercompany loan)	$	(0.3)	$	(28.3)	$	(22.1)	Other expense (income)
Derivative designated as hedging instrument	0.3		28.3		22.1		Other expense (income)
Amount excluded from effectiveness testing	(1.4)		5.2		3.0		Other expense (income)
Total	$	(1.4)	$	5.2	$	3.0

We recognize in earnings the initial value of forward point components on a straight-line basis over the life of the fair value hedge. The expense recognized in earnings, pre-tax, for forward point components for the year ended December 31, 2023 was $0.2 million. The income recognized in earnings, pre-tax, for forward point components for the years ended December 31, 2022 and 2021 was $4.0 million and $2.6 million, respectively. We expect to recognize a loss of $2.5 million in earnings, pre-tax, for forward point components in 2024.

The following tables summarize the effects of derivative instruments designated as fair value, cash flow, and net investment hedges on OCI and earnings, net of tax, for the years ended December 31:


	Amount of Gain (Loss) Recognized in OCI
($ in millions)	2023		2022		2021
Fair Value Hedges:
Foreign currency hedge contracts	$	(2.0)	$	1.3	$	0.6
Total	$	(2.0)	$	1.3	$	0.6
Cash Flow Hedges:
Foreign currency hedge contracts (hedges of net sales)	$	(0.8)	$	0.3	$	(0.2)
Foreign currency hedge contracts (hedges of cost of goods and services sold)	(4.0)		(1.1)		(1.8)
Forward treasury locks	—		—		—
Total	$	(4.8)	$	(0.8)	$	(2.0)
Net Investment Hedges:
Cross-currency swap	$	8.6	$	9.1	$	7.7
Total	$	8.6	$	9.1	$	7.7


	Amount of (Gain) Loss Reclassified from Accumulated OCI into Income						Location of (Gain) Loss Reclassified from Accumulated OCI into Income
($ in millions)	2023		2022		2021
Fair Value Hedges:
Foreign currency hedge contracts	$	2.9	$	(1.6)	$	(0.8)	Other expense (income)
Total	$	2.9	$	(1.6)	$	(0.8)
Cash Flow Hedges:
Foreign currency hedge contracts	$	1.3	$	(1.2)	$	0.9	Net sales
Foreign currency hedge contracts	2.2		3.5		1.7		Cost of goods and services sold
Forward treasury locks	0.2		0.2		0.3		Interest expense
Total	$	3.7	$	2.5	$	2.9
Net Investment Hedges:
Cross-currency swap	—		—		—		Other expense (income)
Total	$	—	$	—	$	—

Refer to the above table which summarizes the effects of derivative instruments designated as fair value hedges within the other expense (income) line in our consolidated statements of income for the years ended December 31. The following table summarizes the effects of derivative instruments designated as cash flow and net investment hedges by line item in our consolidated statements of income for the years ended December 31:

The following table summarizes the effects of derivative instruments not designated as hedges in our consolidated statements of income for the years ended December 31:


	Amount of Gain (Loss) Recognized in Income						Location on Statement of Income
($ in millions)	2023		2022		2021
Commodity call options	$	(1.3)	$	1.5	$	1.7	Other expense (income)
Currency forwards	0.1		0.0		0.0		Other expense (income)
Total	$	(1.2)	$	1.5	$	1.7